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Further Education and Training Bill [HL]

Volume 687: debated on Wednesday 13 December 2006

My Lords, I beg to move that this Bill be now read a second time.

This is a vital period for the development of further education, as we take critically important steps to raise skills levels in our society. The FE sector has made tremendous progress in meeting the needs of learners and employers, but more needs to be done and this Bill represents the next stage in a reform programme designed to equip our people with the skills necessary to succeed in life and to compete in the global economy.

I need hardly emphasise to the House the scale of the skills challenge we face as a nation. Asia now produces more than Europe. China alone manufactures 50 per cent of the world’s computers and textiles and 60 per cent of digital cameras and mobile phones. By 2020, the G7’s share of global growth will fall to just one-third. The structure of Britain’s workforce is undergoing equally dramatic change. Today, there are 6 million British adults without basic skills, yet jobs for only 3 million of those people; by 2020, in all likelihood, there will be just half a million unskilled jobs.

These are sobering economic statistics, but equally powerful social imperatives are at stake. Young people and adults should have every opportunity not only to increase their value in employment, but to seek self-improvement, to take courses for pleasure and to build self-esteem. In a civilised and democratic society, education, including further education, is an end in itself and not just a means to an end. While we are determined to meet a major economic challenge, we are equally convinced that further education is a path to personal fulfilment and that it must continue to be so.

It may assist the House if I explain the Bill’s main provisions. Part 1 reorganises and streamlines the Learning and Skills Council, which I shall now call the LSC for short. Within a new regional infrastructure, the LSC will operate more effective local partnerships with businesses, education providers and other stakeholders. Clause 1 reduces the minimum number of LSC members from 12 to 10. Clause 2 establishes regional committees, to be known as regional learning and skills councils. We intend that there should be a network of nine regional learning and skills councils. The clause allows the Secretary of State to make provisions for the regional councils, including appointment of their members. It also sets out the functions and duties of the regional councils and the guidance which the LSC must prepare on their behalf.

Given the creation of the nine regional councils, Clause 3 removes the 47 local learning and skills councils and the related statutory provision. Clause 5 removes the requirement for the LSC to have statutory committees for young people and adults, while Clause 8 aligns the LSC’s planning year to the academic year used across the sector. Part 1 also establishes in Clause 4 a new duty on the LSC to respond to skills and training strategies developed by other organisations, as requested by the Secretary of State. In particular, Clause 4 enables the creation of the London Skills and Employment Board, chaired by the Mayor of London, and the development of an adult skills strategy, which the LSC will implement. When implementing the strategies of the London board or other designated organisations, the LSC must still comply with its existing duties. If the LSC proposes not to implement a strategy it must refer the matter to the Secretary of State.

The LSC will have other responsibilities to engage more effectively with learners and employers. Clause 6 establishes a new duty requiring the LSC to ensure greater opportunities for learners and employers to influence not only what gets studied, but how and where. Clause 7 requires the LSC to consult these groups, which, critically, includes canvassing the views of potential learners. Clause 9 clarifies the LSC’s ability to participate in a range of organisations providing educational opportunities, including charities. Part 2, Clause 20, and Part 4, Clause 25, clarify the ability of further and higher education corporations to do likewise. Finally, Part 1 authorises the LSC to deliver services on behalf of other publicly funded partner organisations. Clause 10 would enable the LSC to provide services to partners, such as shared accommodation, and Clauses 11 and 12 enable the LSC to offer career development loans.

Part 2 concerns further education colleges. Clauses 13 to 16 transfer the powers to incorporate and dissolve further education corporations from the Secretary of State to the LSC. It also establishes an effective process for intervention where FE provision is found to be unsatisfactory, mismanaged, or not improving. In Clause 17, intervention powers are transferred from the Secretary of State to the LSC, making sure the council has the statutory authority to act in such circumstances, including a new power to direct the governing body of an FE institution to dismiss its principal and senior staff. The Bill bolsters existing provisions which allow the LSC to withdraw funding from or to close a failing FE institution.

Clause 19 concerns foundation degrees. At present, an FE institution wishing to award foundation degrees needs to enter into an arrangement with a university or other higher education institution with degree-awarding powers. Clause 19 will allow high- performing further education institutions to award their own foundation degrees, removing their dependency on higher education institutions for validation in respect of foundation degrees. I should stress that this provision applies to foundation degrees alone; it does not apply to honours degrees, which will remain the sole preserve of higher education institutions. Higher education institutions will also continue to be able to award their own foundation degrees.

This provision has stimulated a great deal of interest in the House and outside, so I stress to your Lordships that, to exercise this power, FE institutions will need to meet stringent quality criteria. The Government will consult on these criteria once the Bill is enacted. We will also publish detail on the range of criteria to be consulted on while the Bill is before Parliament. The acid test will be that students taking foundation degrees awarded by further education institutions should not receive a lower quality of experience than those taking foundation degrees awarded by higher education institutions. We expect that only a minority of FE colleges will wish to exercise this power and that many FE colleges will continue to embrace foundation degrees awarded by universities.

Part 2 of the Bill establishes other duties relating to FE institutions. Clause 21 requires colleges, like the LSC, to consult learners and employers, including young people in the NEET category—not in education, employment or training. Elsewhere, Clause 22 creates regulations concerning the qualifications of college principals, to ensure further improvements in the management and leadership of the FE system.

In Part 3, we wish to amend an existing anomaly within the Industrial Training Act 1982. Clause 23 enables the industrial training boards to consult a wider range of employers than legislation currently allows, to demonstrate consensus for their levy proposals. Clause 24 proposes to reduce the bureaucracy surrounding this process by expanding the duration of the levy period from one to three years.

Finally, Clause 26 in Part 4 gives the National Assembly for Wales new powers to take action regarding its own further education sector.

I shall now explain how the Bill fits into the Government’s long-term vision for further education.

The Bill builds on our longstanding commitment to the FE system. Since 1997, government investment in FE has exceeded £55 billion. Spending this year is 48 per cent higher in real terms than in 1997. Over the next two years, funding for FE participation will increase in cash terms by more than £300 million. The LSC budget will rise to £11.2 billion in 2007-08, up from £10.5 billion in 2006-07.

That investment means steadily better prospects for individuals. Since 2001, for example, 4.5 million people have benefited from our basic skills programmes which had their origin in the important 1998 report by the noble Lord, Lord Moser, on adult basic skills. In that same period, a quarter of a million people have undertaken modern apprenticeships and 50,000 people have taken foundation degrees. Every year, the FE system caters to well over 5 million people who complete around 12.5 million courses.

At the same time, FE institutions work closely with employers: on apprenticeships alone, they have collaborated with more than 130,000 businesses. They deliver the vast majority of adult level 2 qualifications: almost three-quarters of adults are now qualified to at least level 2. Success rates have risen across the FE sector as a whole, with sixth form colleges leading the way and general FE colleges rapidly improving.

The essential test for all public services is customer satisfaction, and, here again, the FE system is delivering. More than 90 per cent of learners say that their institutions have provided the teaching that they had sought. These achievements speak volumes for the talent and effort of all those working in the FE system—not least the 400,000 teachers engaged in professionalising this country’s workforce.

However, we have rightly developed an ongoing agenda that commits us to creating and sustaining world class further education.

In doing so, we have drawn heavily on Sir Andrew Foster’s report, published in November 2005, which sought to raise the capacity of the FE system: to improve employability and skills, to support economic growth and to foster social inclusion. It challenged leaders and staff to deliver high quality teaching across the board.

To implement the Foster report, our recent FE White Paper promised new incentives for colleges and independent providers to develop their own distinctive specialisms, as well as developing closer relationships with higher education institutions. It required that robust intervention methods be devised to tackle unsatisfactory and mediocre provision and it undertook to invest more in the professional development of the FE workforce, to reduce bureaucracy, and to reinforce the LSC’s strategic influence at the local level. This Bill contributes to all these elements of reform set out in the Foster report and the subsequent White Paper.

A further important contribution to the debate on the future role of FE came last week with the report of my noble friend Lord Leitch. My noble friend’s report highlighted the task facing us over the next 15 years in terms of skills competitiveness: the 7 million adults who still lack functional numeracy and 5 million who lack functional literacy; the 35 per cent of the working age population who still do not have full level 2; and the 36 per cent qualified to intermediate—level 2-3—compared to 50 per cent at the equivalent level in, for example, Germany and New Zealand. The report also noted that by 2020, although the position will improve, on current projections we will still lag behind significantly.

Taking forward my noble friend Lord Leitch’s recommendations is a task which extends well beyond this Bill. However, the Bill is firmly rooted in my noble friend’s analysis: that further education is the responsibility not only of the state but of employers and individuals and that it must teach the skills on which individuals, employers and the wider economy all rely, but that this should not be interpreted as narrow vocationalism. It must include the general education that employers value and which provides an essential basis for learners to prepare for flexible working and career development in the fast-changing and demanding economy of the future.

The development of foundation degrees is a case in point. I pay tribute to my noble friend Lady Blackstone, who, as Minister, took the bold decision to create foundation degrees, spanning further and higher education. Her decision has been amply vindicated in the past five years, as the number of foundation degrees has expanded tenfold in that period. Substantial further growth lies ahead: our target is 100,000 foundation degree students by 2010, an expansion that is badly needed to meet the skills demands that the country faces. For those 100,000 foundation degree students we believe that there will be enlarged opportunities for universities and colleges, working together collaboratively as appropriate.

Motivating more young people and adults to engage and invest in further education will require colleges to offer flexible courses whose benefits are transparent. Learners and employers must be empowered when it comes to determining what courses are funded and how they are delivered. For this reason, the Bill imposes new duties on the LSC to monitor the availability, choice and diversity of learning opportunities as well as further duties on both the LSC and FE institutions themselves to consult widely over their provision.

There is an important workforce dimension in our proposals. World-class skills can be guaranteed only through an FE system which employs excellent teachers and managers. The Bill introduces regulations requiring FE principals to have achieved or be working towards a recognised qualification, putting them in this respect on a par with school head teachers, who for some years have had such a requirement. Besides this current legislation, the Government are investing in new measures to support the FE workforce through mandatory continued professional development.

I am glad to say that cases of poor or unacceptable provision in the FE sector are few and far between, but there needs to be a proper system for tackling poor and unacceptable performance. This Bill will create the statutory basis for intervention, for which responsibility will lie with the LSC. Intervention should, of course, be in inverse proportion to success. Whenever intervention is necessary, the LSC’s actions must be both transparent and effective, with the safeguard that the Secretary of State can step in, should he consider that the LSC has failed to discharge its duty in the proper manner. When provision is poor, the Bill also allows new entrants to compete for replacement services, with the LSC expected to promote diverse approaches to teaching and learning to meet the needs of learners and employers.

The LSC has a central role to play in funding, commissioning and reform. However, concerns have been expressed that the LSC is too bureaucratic and, last year, Sir Andrew Foster reported that the FE system was over regulated. Since then, the LSC has sought to simplify its operation and reduce bureaucracy. By restructuring its executive structure, the LSC has reduced by around 1,100 staff, providing savings of around £40 million per annum for investment in learning provision. The Bill will enable further efficiencies to be secured in future.

I conclude by quoting from the powerful opening words of the Leitch report:

“In the 19th Century, the UK had the natural resources, the labour force and the inspiration to lead the world into the Industrial Revolution. Today, we are witnessing a different type of revolution. For developed countries who cannot compete on natural resources and low labour costs, success demands a more service-led economy and high value-added industry. In the 21st Century, our natural resource is our people—and their potential is both untapped and vast. Skills will unlock that potential. The prize for our country will be enormous—higher productivity, the creation of wealth and social justice”.

That is the challenge before us, and the prize if we meet the challenge. This Bill is essential to this great national purpose, and I commend it to the House.

Moved, That the Bill be now read a second time.—(Lord Adonis.)

My Lords, I am most grateful to the Minister for setting out the Bill so clearly, and to the Bill team for its thorough explanation of the clauses and the thinking behind them.

Further education matters because the difference that it makes really counts. The cost of inadequate emphasis on FE and training is borne by the millions who could benefit from the skills they would acquire at college but who are to be found among the growing, sad brigade of NEET. As the Minister mentioned, NEET are young people aged between 16 and 24 who are not in education, employment or training. They are often failed by the system and all too frequently cheated of their chance to prosper.

I hope, as I know do all Members of your Lordships’ House, that this debate and further consideration of the Bill will offer new hope to those young people. It is a pleasure to contribute to today's debate, because I trained to become a teacher at an FE college. That college is now part of a new university, Nottingham Trent. Over the years, we have seen a changing landscape as colleges and polytechnics metamorphose into new institutions. That evolutionary change is taking place in the FE sector. As old industries give way to new ones, colleges and the dedicated professionals who work in them will have to adapt to new challenges.

Last Friday, I had the pleasure of visiting Bolton Community College, which, when I was growing up and being educated in Bolton, was known as Bolton tech. It had a strong emphasis on engineering then, as you would expect from a town with a proud manufacturing tradition that played such a large part in the industrial revolution. In addition to offering these skills, it is now a centre of vocational excellence in construction and health, and one of the leading colleges for work-based learners.

I was very impressed by what I saw, but most impressive of all is how the Ofsted report demonstrates its outstanding capacity to improve its provision. We should hold that ambition for all who are committed to equipping our workforce with the skills for a new age.

The acquisition of skills is important to our national economic competitiveness because of their impact on productivity, so it is critical that we improve our skills base. It is now widely acknowledged that Britain's future will be as a skills- and knowledge-based economy. We could not, and should not, aim to compete with countries such as China in low-end manufacturing. The Secretary of State, Alan Johnson, admitted in another place that the number of unskilled jobs will go down from 3.5 million to just over half a million by 2020. This need not be seen as a decline or in negative terms. Instead, the 5 million highly skilled jobs that will be created in the same period present an opportunity as much as a challenge, but it is an opportunity that can be grasped only through a step change in the nation's skills.

Skills are not only a route to a higher wage or a different type of job; as the Minister said, they are also about individual well-being, a means to encourage and enable aspiration and to allow people to take control of their lives to enjoy a more confident lifestyle. The happiness index compiled by City and Guilds shows that vocational workers are the most likely to feel fulfilled by their work. Demographic change means that we cannot rely on the younger generation to fill future employment needs. Our population is getting older and we must learn to stop considering training as the sole preserve of the young.

In the light of the growing consensus about the importance of skills, the Government asked the noble Lord, Lord Leitch, to consider the UK's long-term skills needs. We, the noble Lord, Lord Leitch, and sometimes even the Government recognise the need for FE colleges to become stronger, more flexible institutions, able to respond to local demand, but this Bill places yet more power into the hands of the LSC, which now includes regional councils.

In his vision of the FE colleges of the future, Sir Andrew Foster, in his report Realising the Potential, sees colleges as vital—indeed, he says it should be their primary purpose—to improve employability and skills in their locality. He says that they should work effectively with their local LSCs, helping them to develop and implement strategies. How will that work? How will this vital element of localism be captured with the abolition of local LSCs and a move to regionalism? The Minister has explained the move from local to regional councils as a considerable saving against waste and bureaucracy. That remains to be seen. This is the fourth reorganisation of the LSC in five years. I cannot help but be reminded of the quotation, frequently ascribed to Petronius, that,

“we tend to meet any new situation by reorganizing, and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralization”.

When the Bill that gave birth to the Learning and Skills Council was debated in your Lordships’ House on 17 January 2000, my much-missed friend Lady Blatch said that the proposals in the Bill were bureaucratic, would result in duplication and were costly and confusing. How very right she was. If the Government truly wish to reduce inefficient waste and bureaucracy, why does the Bill not mention the 17 bodies that have an oversight role over FE colleges? Why do they continue to make grand statements, set impressive targets and then refuse to give FE colleges the autonomy with which to realise them—especially as the Foster review called for less centralisation and moves towards greater self-regulation?

FE colleges, quite rightly, must be given the freedom to innovate and excel with the light-touch, understandable and simple structures that they so desire. That inconsistency between what the Government say and do is repeated throughout the Bill. In marked contrast to the extraordinary raft of increased powers for the LSC to axe college principals and governors, the only increased power the Government are giving FE colleges is the opportunity to award foundation degrees, ending the reliance on higher education. Others in this House will no doubt wish to speak in greater detail about that. For me, it emphasises the dichotomy of the Government's approach: on the one hand to give more independence, on the other to tighten control. Colleges must be allowed to mature to own their qualifications, but rigour should be maintained and good partnerships and good relationships retained.

In his report, the noble Lord, Lord Leitch, states that,

“the case for action is compelling and urgent”.

It is compelling and urgent for employers and potential learners alike. A recently published survey by Lloyds TSB shows that skills gaps are the greatest concern of businesses, greater even than the threat of a terrorist attack. Some 48 per cent said that they had experienced difficulties in recruiting qualified workers. At the same time, UK unemployment continues to rise, climbing by 27,000 to 1.71 million in the three months to September—the highest level in seven years. A total of 1.3 million young people between the ages of 16 and 24 are not in education, employment or training, an increase of 29 per cent since 2001. Of course, in failing so many Britons, Britain is on course to fail.

The Further Education and Training Bill will do little to meet these challenges. Remarkably, in the Queen’s Speech debate, Alan Johnson, the Secretary of State, suggested that the Leitch review was of little relevance to the Bill. In the other place he said:

“We do not see a need to wait for Leitch before the Bill. Indeed, we think that Leitch’s report will make such radical proposals that there will need to be a further period of consultation. I doubt very much whether there is anything in Leitch that will necessitate our changing the Bill”.—[Official Report, Commons, 16/11/06; col. 251.]

The Government are not bringing forward a system driven by employers and learners as the noble Lord, Lord Leitch, advocates. Instead, they are entering a supply-driven system of the very type that the noble Lord says has failed. Ministers have imposed a rigid system unresponsive to the needs of employers and learners. There is a danger that the weight of central direction and control is stripping FE professionals of a clear sense of vision and purpose. This danger is accentuated by the Bill, which would give the Learning and Skills Council draconian new powers to sack college principals, managers and governors, despite the fact that FE colleges receive some of the best Ofsted reports in the public sector. It is clear that the Government do not have a coherent strategy. Why bring out a Bill that is seen by many in the sector as a technical and tidying-up process? Why are the Government in such a hurry to legislate? Why is this a Bill with no vision?

In contrast, Conservatives are clear-sighted about our belief in vocational education. As the shadow Minister John Hayes, whose contributions to this debate were recently praised by the chief executives of the Association of Colleges and the Creative and Cultural Skills Sector Skills Council, said, a Conservative strategy will be shaped by the “elevation of the practical.” He added that Britain must be the best it can be but that we are failing to fulfil the nation's promise.

The Bill fails to address five key areas. First, investment in skills training: how much the Government should spend, where business should contribute, and what individuals should pay. The Bill says nothing about these issues, even though the noble Lord, Lord Leitch, concludes that we need to invest far more. We should look for ways to encourage individuals and businesses to invest in their future. Individuals and businesses will spend more only if they are confident that training will deliver the skills they need. We need a much better match between supply and demand, and between provision and need. We must develop a system driven by the choices of learners and the economic needs of business.

Secondly, meeting the needs of learners and businesses means breaking down the rigidity between further education, higher education and schools. If the new specialised diplomas are to succeed, they must be taught by the best teachers with the best facilities, regardless of whether this happens to be at a school, the local FE college or the university campus. Thirdly, to drive the system forward, learners and employers must have confidence that vocational qualifications will meet their needs. This means looking at accreditation—the esteem and rigour of qualifications. We need a coherent system of qualifications that is well understood and which fits together. Fourthly, the system needs to be driven by the choices of learners. We need a careers service that provides learners of all ages with the information they need to make the right choices. Fifthly, on bureaucracy and regulation, we must address the opportunity missed by this FE Bill to give colleges the freedom necessary to innovate and excel, and to meet the needs of businesses and learners.

Surely these issues go beyond party concerns. In that spirit, we urge the Minister to seize the chance the Bill offers to address the profound challenges highlighted by the noble Lord, Lord Leitch. We urge the Government to grasp this opportunity to table amendments that address the five points that I have made and to take steps to empower FE to meet the challenge and to bring new hope to those whom the system has failed.

My Lords, I also thank the Minister for setting out the purpose and aims of the Bill so clearly. I declare an interest as a member of the corporation of Guildford College.

When we first saw the Bill, we thought that we would have very little difficulty with it. We saw it as a relatively uncontroversial Bill that was tidying up a number of rough edges around the sector. There are aspects of the Bill with which we have no difficulty whatever and which we very much welcome, such as Clause 7, on listening to the voices of learners and students; Clause 22, on the training of principals; and the parts of the Bill that relate to the industrial training boards. We welcome those and think they are clarifications of the present position.

There is a big question about why we have the Bill before us now. The Minister basically pointed to the Foster report and said that the Bill is carrying through the report’s proposals as set out in the White Paper last spring. In many senses that is true, but the Foster report was accompanied by the first tranche of the Leitch report and it was very clear that there was going to be a subsequent report. I confess that we on these Benches thought that the Bill would not be published until after the second Leitch report and that it would incorporate many of the proposals from that report. It is a great shame that the Government did not wait, because there is a discontinuity between the proposals put forward in the Bill and the proposals in the Leitch report.

The Leitch report is effectively separating out 16-to-19 further education and adult further education. In many senses it is putting the money not in the hands of the LSC but into the hands of the adults themselves through the proposed learning accounts, and into the companies through the Train to Gain programme. Therefore, in many senses the LSC will have much less purchase on the FE sector in future if the Leitch proposals are carried forward. There is also—not in Leitch but put forward by the Government—the notion that the school leaving age should be raised to 18. Again, we shall need legislation for that. Why do we have this Bill now? Why not leave it until later?

If and when those ideas are implemented, we shall need to have another Bill. We need to have a debate on the balance in training young people between 16 and 19 and training adults. One of the parts of the Bill that I regret is the one that does away nationally with the committee that deals with both adults and young people. When we put the Act through in 2000—the noble Baroness, Lady Blackstone, will remember this—great emphasis was put on the need to have that adults committee, because we were worried about the preservation of that part of adult learning, leisure learning, which is now being totally sidelined. I am sorry to see that going.

If we are going to have a broad debate, why is it that the further education sector remains the Cinderella sector? Why is it that further education colleges receive £200 less per student in A-level studies than schools do? The unfairness to the further education sector still exists and has not been sorted out. The Bill does not aim to do that.

Why do we have the Bill? The main reason seems to be to provide legislative cover for the reorganisation of the LSC which has already half been put into effect. As Parliament, our job is to hold the Executive to account. Why are they already doing things for which they do not have legislative cover? As for diversity and choice, that is the old agenda of supplier diversity, not so much diversity of the curriculum. It ignores, for example, some very real problems of the inclusion agenda in the FE sector. My noble friend Lady Walmsley will discuss that at greater length in her later contribution. Intervention is the old agenda of sounding tough about poor performance, but is it really appropriate to hand over the powers of the Secretary of State to the LSC at this time?

The big surprise in the Bill—a surprise we gather even to the Bill team until a week before the Bill was presented to us—is the inclusion of the right for further education colleges to accredit foundation degrees. That is not the way to make legislation—there was no consultation whatever. The Minister said that there will be consultation, but that is not the way to legislate.

Let us look at the three most important parts of the Bill. The first is the reorganisation of the LSC, in Clauses 1 to 4, and the move to nine regional bodies instead of 47 local learning and skills councils. This Bench welcomed such a change back in 2000. We argued very strongly that we did not need 47 local learning and skills councils and that they ought to be aligned with the new regional bodies, the RDAs, which were being created.

The difficulty now is that if Leitch is followed through, all the work on regional strategies may be unnecessary, since this post-19 provision will be employer led, and the strategies will be led by the sector skills councils. It is not clear in the Bill how London fits into all that, although it does make it clear that London is a special case. My noble friend Lady Hamwee will deal with the London issue.

With the exception of London, the big hole in the Bill is the linkage between the regional and local levels. The LSC will play, and does play, a major role in the 14-to-19 agenda, the development of specialised diplomas, in expanding sixth-form provision and in raising the school-leaving age to perhaps 18. The LSC is the funder for all that provision. Why then is there no mention or emphasis in the Bill on the 148 local area partnerships which will play a vital role in developing these visions? Why is there this inconsistency between this Bill and the local government Bill, where so much emphasis is put on local area agreements within which priorities for local areas are to be agreed between central and local government and other key players? Does all the stress on regional strategies not open the door to conflict and tension between local and regional objectives? Does the Bill not need to give greater weight to working in partnership with lower tiers of government?

I move now to the second part of the Bill, Clauses 13 to 18. On the face of it, the transfer of powers from the Secretary of State to the LSC—except in Wales where the powers go from the Assembly to the Minister—seems fairly sensible. The LSC has the local knowledge of the sector and, where appropriate, it should take action. We have very little problem with Clauses 13 to 16, which transfer powers to establish and dissolve FE institutions to the LSC. However, we should retain in Clause 15 the requirement that any such action should be taken only after due consultation on the proposals.

The key problem we have is with Clause 17, particularly with new Section 56A(2)(d), where intervention is justified because,

“the institution is performing significantly less well than it might in all the circumstances reasonably be expected to perform, or is failing or likely to fail to give an acceptable standard of education”.

Clause 17 as a whole transfers to the LSC the Secretary of State’s powers to intervene or to remove some or all of the governing body, to appoint new members of the governing body, and to issue a direction to the governing body, including a direction ordering that body to dismiss a principal or other members of staff. The Secretary of State will, incidentally, retain powers to intervene as a last resort.

So how reasonable is this transfer of powers? Various issues arise, the first of which is accountability. At the moment, the Secretary of State has the ultimate power to intervene but has never used that power. But, if the Secretary of State did intervene, at least he or she would be a representative of an elected Government. The LSC is not elected—it is an appointed body—and there is a real accountability issue. The argument for transferring the power to the LSC is that it is closer to the action. Therefore, are we expecting the LSC to intervene more often than the Secretary of State? If so, as I said, there is an issue of accountability. If not, and action is only in extremis, why bother to transfer the powers at all?

Secondly, further education colleges are set up as private corporations. As I declared at the beginning, I am a member of the corporation of Guildford College. Governors are appointed as directors of that corporation and they have ultimate responsibility for its functioning. Paragraph 7.39 of the White Paper says:

“A college, led by its governing body, is responsible for determining its own mission, managing its own affairs, meeting its statutory responsibilities and improving its own performance”.

Part 4 of the Education and Inspections Act, which recently went through this House, gives powers to the LSC well beyond those given to the LEA to intervene in failing schools, and, again, the power of the Secretary of State to intervene as an ultimate sanction is retained. If the LSC steps in and, for example, dismisses a principal, what happens if there is a suit for unfair dismissal? Who bears the cost? Who pays the compensation, if it is awarded? Does this provision not totally undermine the whole concept of the independence of the board of the corporation?

Thirdly, is it really necessary for the LSC to have powers of intervention? Further education colleges, under their corporate governance, are the one sector of education—the Minister made reference to this—that have improved their performance and met all their performance indicators. Why single out further education when the Government are not taking comparable powers to intervene in universities or schools with sixth forms? Fifty per cent of the LSC funding goes to schools with sixth forms. Ofsted and ALI have together usefully prodded the laggards in this sector. As the Minister said, governing boards have acted, principals have been dismissed or, more frequently, have been persuaded to leave, and under-performers have been taken over by stronger colleges. That trend is likely to increase with fiercer competition in the sector. Behind Ofsted has been the ultimate sanction that the Secretary of State could intervene if necessary, but, as I said, he or she has never done so. If this is so successful a model, why is it now necessary to change it?

Lastly, why should all the power go to the LSC when it provides a diminishing share of further education college funding? Although the LSC is often the largest funder for many colleges, it is by no means the only one, putting in something like 50 to 60 per cent of the funds. Why should it have the power to intervene? That will be even more the case if Leitch is implemented, as much of the post-19 funding will be transferred either to industry or to individuals. Is it really sensible now to transfer these powers from the Secretary of State to the LSC?

Finally, I come to the big enigma in the Bill: the issue of colleges being able to accredit their own foundation degrees. We have considerable difficulty with that proposal. The key issue is that of collaboration and establishing foundation degrees as a stepping stone to further qualifications within a lifelong learning framework. Those degrees have been slow to take off. The Minister said that he was looking forward to there being 100,000 but, at the moment, there are only 46,000 foundation degrees, with 76 per cent being taught in further education colleges. Sixty-five per cent of the students are over 21, 46 per cent of them are part-time, and 52 per cent are full-time. Such degrees are, and are becoming, a very important route to widening participation. We do not doubt that and we welcome them from that point of view.

Why, then, do we hesitate over the power of colleges to accredit the degrees themselves? It is largely because of some of the unintended consequences and the failure to consult, which I think means that we have not worked our way through those unintended consequences. The first consequence is that, rather than encouraging collaboration, the proposal could—not necessarily will—break up useful collaborations that already exist. Many universities and further education colleges are already working well together. Guildford College has links with Southampton, Surrey and Kingston Universities, and they work very well indeed. If colleges get the right to accredit their own degrees there is a danger that it will become a status symbol and those collaborations will break up as they accredit their own degrees.

Secondly, the proposal raises the question of what a degree is. Should we be using the term degree for a two-year qualification? I have always been one of those who regretted that the Government chose to call these foundation degrees “degrees” rather than to use the old and well-established Higher National Diploma. It also causes enormous difficulties, particularly in the international scene. The UK has spent the best part of 10 years trying to persuade our European partners within the Bologna process that our three-year bachelor degrees are worthy degrees and can be regarded as such. The proposal seems to muddy the field yet once again and makes it difficult to make clear to our Bologna partners that we are not devaluing.

Thirdly, it is not clear what degree-awarding powers will mean in this case. The QAA, which will accredit the institution, will accredit the institution but not the individual courses there. We have to recognise that further education colleges, very rightly, provide everything and anything, from basic skills through to higher-level degrees. We should welcome that. However, none of those qualifications is currently accredited by the institutions themselves. They are accredited largely by organisations such as the City and Guilds, Edexcel, AQA, the RSA and other professional organisations. Why are we suddenly giving them the right to award their own degrees? One of the arguments in favour is that the procedures for universities have been far too bureaucratic. However, if the colleges wish to be accredited, they will find it a bureaucratic process to get QAA accreditation. It will take them three to four years to do it. Or is the process too expensive? There have been complaints that the universities have been top-slicing 30 per cent off the funding when they set up and accredit the degrees. However, surely that is an argument within HEFCE. They should go to HEFCE and argue there.

Finally, there is this question of the sheer lack of consultation. The proposal was not in the White Paper or in Foster. It was put into the Bill at very short notice and no one was consulted. As I said, that is not the way to make legislation.

Our conclusion is that this is a little Bill that raises more questions than it answers. We think that its presentation to the House is premature and that the Government should have waited for Leitch and brought us better crafted and better thought-through legislation.

My Lords, I promise to talk about something other than disability one of these days, but I hope that your Lordships will forgive me if I talk about it just once more and focus on the disability aspects of the Bill, in view of the crucial importance of education in combating the disadvantage that disabled people experience in our society.

Consider for a moment, if you will, the following facts. At 16, young disabled people are twice as likely not to be in any form of education, employment or training as their non-disabled peers—the figure is 15 per cent for disabled people as against 7 per cent for non-disabled people. This gap increases to three times as likely by the age of 19—27 per cent as against 9 per cent. Apparently things are getting worse, not better. According to a DfES study published last year, the number of young disabled people not in any form of education, employment or training increased from 11 per cent to 15 per cent between 2000 and 2004.

Disabled people are around twice as likely as non-disabled people to have no recognised qualifications. The Fabian Commission on Life Chances and Child Poverty found that young people aged between 16 and 18 who are not in education, employment or training are at a much higher risk of experiencing poor outcomes in adult life and passing on this disadvantage to the next generation as they themselves become parents. The Equalities Review, which was set up to identify the deepest and most persistent causes of disadvantage, found that not being in education, employment or training for six months between 16 and 18 was the single most powerful predictor of unemployment at age 21.

That is a dire situation for disabled people to be in. In today's society, anyone who wishes to secure sustainable employment and so enjoy an independent life requires at least basic skills in literacy, numeracy and information technology, some form of formal qualification and effective informal skills such as social and interpersonal skills. Research indicates that the number of jobs requiring no qualification has almost halved in recent years from about 18 per cent in 1994 to 11 per cent in 2004. We have also heard the Minister’s figures. This trend is set to continue, with the prediction that in 2020 almost half of all employment will be in higher-skilled occupations. No wonder, then, the recent emphasis in the Leitch report on the paramount need to upskill the British workforce, something that the Chancellor underscored in his Pre-Budget Statement last week and the Minister further stressed today. Yet in 2005 the Labour Force Survey found that 35 per cent of disabled people had no formal qualifications at all. As a result, they are more likely to be either unemployed or in low-paid, low-skilled jobs.

At a national strategic level, the Government have outlined, in a Cabinet Office report that was published at the beginning of last year, an ambitious vision for improving the life chances of disabled people. The report states that by 2025 disabled people should have full opportunities and choices to improve their quality of life and should be respected and included as equal members of society. The further education system has a vital role to play in achieving this vision. Appropriate and accessible further education can empower disabled people with the skills and knowledge that they need to help them to bridge the skills gap and to get into work.

However, earlier this year, the Adult Learning Inspectorate reported that,

“the current provision for adult learners with disabilities is costly and does not provide value for money”.

In the introduction to the report, David Sherlock, the Chief Inspector of Adult Learning in England, was even more damning when he wrote of the post-16 education system,

“compassion is seen as not only sufficient, but as a justification for restricting ambition and growth”.

This is all extremely gloomy when one thought that things were getting steadily better following the publication of the Tomlinson report a decade ago.

To tackle this state of affairs, the Learning and Skills Council recently launched its first national strategy for learners with a learning difficulty and/or disability within the further education system, which seeks to implement the recommendations of the Little review, Through Inclusion to Excellence.

Against that background, the present Bill is to be welcomed for the quest for excellence that it seeks to underpin through the establishment of an effective intervention regime by transferring to the LSC the Secretary of State's power to intervene where provision is unsatisfactory or not improving. In such circumstances, all that is needed here is an assurance that the needs of disabled learners will receive due consideration in any transition arrangements.

I very much support the inclusion agenda for all those who can effectively access mainstream colleges. Indeed, my own organisation, RNIB, has been proactive in seeking to establish college partnerships in all the English regions, in order to mobilise our specialist expertise in support of blind and partially sighted learners in mainstream colleges. At the same time, there is a need to retain some specialist college provision, particularly for those who have multiple disabilities and may be less able to cope in the mainstream and while mainstream colleges are not yet fully geared up for meeting the needs of all learners with learning difficulties and disabilities, especially the most complex.

In that connection, I am concerned that regional planning, funding and placement are placing excessive pressure on the viability of specialist colleges—pressure that it may sometimes be impossible to withstand. RNIB—and here I declare my interest as chairman—has recently had to withdraw from the provision of further education at its Redhill College in the face of the twin pressures of the funding regime, which failed to cover the cost of providing its specialist service, and regionalisation, which effectively forced a specialist college reliant on an inter-regional or national catchment because it catered for a minority impairment group to become more generic, thus losing the attraction of its specialist expertise.

In the recognition that the voluntary sector has an important part to play in partnership with the FE sector in delivering further education and training tailored to the needs of those with learning difficulties and disabilities, there are just three specific areas in which I would welcome some further clarification or reassurance from the Minister. I hope that he will not find it difficult to make a positive response to these modest requests, in comparison with the onslaught that his Bill has sustained from the previous two speakers.

First, with regard to Clause 2 of the Bill, regionalisation of the LSC will undoubtedly help voluntary bodies in working with the sector and make it more manageable for national providers to influence LSC strategy. Until now, it has been necessary to liaise with up to 47 different local learning and skills councils, with the variation in response that this inevitably entails. Now it will be possible to have a more strategic regional dialogue, which will make it possible to have a greater impact on a larger number of learners. As regards the future composition of the new regional councils, it would be good to have some clarification on the categories of membership in order to ensure that the voluntary sector is fully represented and that due regard is paid to the representation of learners who have learning difficulties and or disabilities.

Secondly, as regards Clause 6, on the functions of the council and in particular its duty in relation to diversity and choice, I would welcome an assurance that the opportunity for individuals to exercise choice will extend to the full continuum of provision encompassing, as now, national residential as well as local mainstream colleges.

Thirdly, on Clause 7, which concerns consultation by the council, I welcome the requirement for consultation with learners and employers to ensure that provision meets their needs, but I would like some reassurance that any consultation process will take account of the accessibility needs of persons with learning difficulties and disabilities. Furthermore, it would be helpful to have some clarification of whether consultation will be confined to learners and employers or whether it would be reasonable to expect a wider consultation process involving voluntary bodies with a relevant interest, and to know that the outcomes of such consultation will be acted on. I think that I heard the Minister say that charities could be involved, but it would be helpful to have his confirmation.

Finally, I refer to the fact that under the framework of the new disability equality duty, which came into force on 4 December, all prospective government legislation must undergo a rigorous disability equality impact assessment. This will show the impact of the changes on disabled people and highlight areas where adjustments are required to ensure that disabled people are not disadvantaged. I trust that, during the Bill’s passage, the Government will publish the disability equality impact assessment so that its findings can be properly considered and debated.

My Lords, I have the honour of serving as the Chancellor of the University of Teesside, and declare that interest. I shall address Clause 19. My university is proud to have developed over a number of years its University of Teesside Partnership, which is an extremely stable and strong partnership with further education colleges in the Tees Valley sub-region, referred to in a report by the Quality Assurance Agency for Higher Education as one of outstanding mutual support and trust. I do not want that support and trust to be damaged.

That outstanding mutual support and trust have been built through a careful process, involving openness in the sharing of ideas and market intelligence, joint planning and curriculum innovation, and a major investment by my university in staff development for staff in further education colleges involved in the planning, delivery and quality assurance of higher education programmes. The partnership has also been facilitated by the university, with assistance from the Higher Education Funding Council for England, investing resources in capital infrastructure to support the partnership in the form of both buildings and resources, as well as learning and teaching delivery across the whole of its partner network. Indeed, my university is particularly proud of the recent investment supported by the funding council’s strategic development fund, which has led to the opening of a physical University of Teesside higher education centre on the new college site of our partner college in Darlington, which will shortly be followed by similar university higher education centres at Middlesbrough College and Hartlepool College of Further Education—a capital investment, I am proud to say, of over £6 million. I do not want that investment undermined in any way.

I endorse the QAA’s view that the partnership between my hometown college and my university is one of great stability and strength. It has grown to a level of maturity whereby the people of Darlington can now lay claim to a university centre within their hometown. Generations of Darlingtonians have only ever dreamed of such an aspiration. The University of Teesside Partnership has embraced a foundation degree award with great enthusiasm and rigour, holding closely to the Government’s aim of making foundation degrees truly vocational qualifications that engage closely with employers and involve extensive learning in practical work settings.

To date, the partnership has developed over 40 foundation degree awards, many of which are now being offered at partner colleges right across the Tees Valley region, with well in excess of 800 students enrolled in these programmes at colleges in Middlesbrough, Hartlepool, Redcar, Darlington, Bishop Auckland and Stockton in the last academic year. It is a great success story by any measure, which has actively and seriously addressed the Government’s commitment to fully engage employers and employer representative bodies in all aspects of planning, delivery, review and evaluation of higher education and higher education skills and training—and, importantly, in closing the education, training and skills gap between educational and vocational routes.

It is a success story that has sought to ensure that foundation degree students have the maximum opportunity to progress seamlessly to honours degree programmes, or other relevant programmes at a higher level. It is all based within a framework providing the structure, planning, systems and checks and balances that it would be difficult, if not impossible, for a further education college—particularly one with limited experience of higher education—to have achieved in isolation. I do not want such difficulties to arise. As your Lordships know, foundation degrees are still relatively new qualifications, which are still establishing their credibility with some employers and potential students. My colleagues at Teesside, in both the university and the colleges of the Tees Valley, have worked hard and successfully to provide the resources, skills and infrastructure to ensure that the foundation degree can be a qualification on which employers can rely and in which public funds can be safely invested.

However, I worry that proposals in the Bill have serious potential to significantly undermine the excellent progress that has been made by further and higher education institutions to date, and that they may well serve to damage the fragile brand of the foundation degree—a brand that, as I have said, has yet to be fully established as a success story. It is not clear to my colleagues and me at the University of Teesside how students or employers will be better served by the proposals than by the strong university/college partnerships, like ours, that currently exist across the country. Nor is it clear to us the basis on which Ministers have come to the conclusion that levels of participation, progression and attainment—or, perhaps more important, protection of standards—will be enhanced. Perhaps the Minister will comment on that.

I make it clear that I am a staunch supporter of the further education sector, which is, by any measure, an outstanding national success story, training over 4 million people annually and providing outstanding provision to local communities and local economies. In expressing that unqualified support, my point is that what further and higher education can do together is much more important and relevant than what they can do alone. I understand that consultation with the higher education sector on these measures has not yet taken place. I know that many in that sector, including my own university, have grave fears that further and higher education cannot simultaneously compete and collaborate on the same qualification. I argue that we have a system that has demonstrated that it works well and I urge the Minister to enter into a dialogue with universities such as my own and their partners to build on that success and on that track record of delivery of which we are all proud.

My Lords, before referring to further education, perhaps I may make one observation about the Bill. The Bill is also a devolution measure. I remind noble Lords that, as a result of its passage, further education in Wales will in future be the responsibility of the Welsh Assembly—which I completely support—as further education in Scotland is the responsibility of the Scottish Parliament. I remind noble Lords that the devolution settlement in our country is neither stable nor final. I think that your Lordships will appreciate my belief that Scottish Members of Parliament should not, when the Bill goes to the House of Commons, be allowed to vote on it since it has no effect at all on them. We are debating today English further education and not UK further education. That is the end of the commercial.

I think that every Secretary of State during their career in office has referred to further education as the Cinderella—I see a former Secretary of State nodding agreement—waiting to be taken to the ball. I made a modest start by releasing the colleges from the control of local authorities, because when local authorities were pushed for cash they always raided the capital or current budgets of the FE colleges. The colleges were freed from that. Some have stepped up to the mark and have been remarkably successful; others have not done so well. That was the beginning of trusting the colleges.

Despite the Minister’s eloquence, the Bill is a bit of a damp squib. I am not persuaded that the general thesis of regional councils is necessarily better. The replacement of 47 by nine is a good example of state supply-side planning. The old countries in the communist bloc thought that they were rather good at that. But all my instincts tell me that it is wrong and that training is essentially a local matter. In the south-east region, the capital is Guildford. People in Canterbury will never go to Guildford, nor will the people from Dover or from Brighton and Lewes. It has nothing to do with Guildford. If there is a deficiency and shortage of plumbing skills in Canterbury, it will be no consolation that there is an over-provision of plumbing skills in Guildford. So I am by no means convinced that the regional solution is the right solution in this matter. But the Government are going to do it. Let us see how it works out.

The Leitch report is interesting and important, but I do not think that it is fundamental enough. It looked at the whole of the FE area post-16. Leitch is trying to make up for the failures of the English schooling system. In effect, he is saying that we do not have enough young people post-16 with appropriate skills; we do not have enough young people with communication skills and we do not have sufficient young people who are literate and numerate enough. Therefore, measures have to be taken.

We have to be more fundamental and go back and look into the schooling system. Two years ago, the Government stumbled on the correct policy and, following the Tomlinson report, decided to develop a 14 to 19 curriculum. I thought that that would be the real breakthrough, so this morning I went to Google and typed “14 to 19 curriculum”—I find that quicker than tabling Parliamentary Questions—and found three or four websites. They were full of good will; earnest people are working on good websites trying to develop the 14 to 19 curriculum. I do not want to berate them because there is real effort, and I could see that they are trying, but no curriculum has emerged.

The problem is simply that on the main website of the qualifications body there are three columns: schools 11 to 16, sixth-form colleges and FE colleges. When you go into each one, you go into separate institutions with separate aims, purposes and objectives. If a young person of 16 tries to find out what the 14 to 19 curriculum is, he finds a morass. It is very difficult to see your way through. The QCA is correctly trying to get conformity on qualifications, so there is a continuum from diplomas up to degrees, but institutions that can deliver the 14 to 19 curriculum are missing.

Therefore, I advocate as a serious policy that the Government should establish as new secondary schools only schools for 14 to 19 year-olds. Call them what you will—skills schools or apprenticeship schools—but they are a new type of school. Tony Blair has already said that he is committed to 200 new academies as part of his legacy. I welcome that, but I wish that he would be more radical. It is no good him relaunching what I did 20 years ago. If he wants a good legacy, leaving 50 or 60 14 to 19 schools would be a legacy worth having.

Why do I support 14 to 19 schools covering leaving school and going on to further education? I do it because far too many young people leave school at 16. They do not necessarily end their education, because many of them will go into a job and have a day release at a local further education college for one day a week. Some will do more than that, but they leave the institution in which they have been brought up. It is a break. If the institution to which they went at 14 continued to 19, it would discourage leaving at 16. Therefore, instead of leaving at 16 and having four days in business and one day in college, in such a school you could have four days in school and one or two days in business. Continuing that process in an educational framework—a school or a college—is better than doing it in business. I think that there is only one 14 to 19 school in the offing, but I hope to try to persuade the Minister and the Prime Minister to do that.

I support what the noble Lord, Lord Low, said. I am president of a charity that maintains one of the most successful schools for the blind in the country. We are under pressure, just as the RNIB is, but that is another debate. In the school for which I am responsible for raising money, we take pupils from two to 25. There is a complete continuum: nursery, primary, secondary and a wonderful post-16 FE college that is bursting at the seams. The pupils seem more assured as they stay within the same institutional framework. Colleges for the blind have shown the way to do that. I do not see why other colleges should not follow.

We need inspiration in this. Last night, I saw the Royal Shakespeare Company’s production of “Much Ado About Nothing”—quite a good title for the Bill, but leave that aside. It was a brilliant production set in Cuba in the 1950s, and I noticed lots of young people in the audience, which is unusual in a London theatre. There were not just older teenagers, but lots of 13 and 14 year-olds, too, so I talked to them in the interval and asked, “Why are you here? Are you just starting Shakespeare?”. They answered, “We haven’t started Shakespeare yet, but we read about the play and a friend said we should come and see it”. They absolutely loved it; they stood up and cheered, and they clapped and shouted at the end. The point of this anecdote is that they were inspired by a remarkable producer who really turned them on, which is what you have to do with children. Children get fed up with education, because there is not that inspiration behind it.

One phrase that I used quite a lot when I had responsibility for these matters was a quotation from another Shakespeare play,

“the fire i’ th’ flint

Shows not till it be struck”.

Every child in our country has a little bit of flint in them. Even the most awkward or rebellious—the one you really feel you should have nothing to do with—has a bit of flint, and the success of education is to find that bit of flint and strike it. That is done better in a continuing institution from 14 to 19, and I hope that the Government will seriously address that possibility, as it would transform the learning skills in our country.

Finally, the Leitch report says some sensible things about involving employers more—not just in the supply side of FE colleges—but another voice should be heard, that of the students. Many 16 and 17 year-olds know exactly what they want to be trained in. Where is their voice? How can they be asked? I will give the House a solution, by using a term that is unpalatable in educational terms: education vouchers. Do your Lordships remember that mad idea from Keith Joseph, the mad monk, which never got anywhere? Well, on 23 November I found a speech by Alan Milburn—who seems to be the thinking edge of new Labour, or what is left of it—in which he said that he would like to see education credits, which is the same as vouchers. He was arguing that parents of children who go to failing schools should be given education credits, so that they can buy them out and send them somewhere else. That was not the mad monk or the right wing of the Conservative Party talking; it was Alan Milburn, a close friend of the Minister, who, if he did not have ministerial responsibility today, would no doubt be making the same sort of speech.

I would like students to be given a greater voice in all this. That is very important. Give them a voucher so that they can go shopping for the sort of course that they want. That would mean that we did not need nine regional councils or anything like that, particularly when there is per capita funding. Further education is an immensely important area, but this Bill does not do very much for it. This is a continuing debate, but I ask the Minister to consider most seriously my main proposal on schools for 14 to 19 year-olds.

My Lords, I must apologise for skittering in like a cartoon character a few seconds after the Minister had started his speech. I hope that I did not miss anything of huge import.

I want to focus on a narrow part of the Bill, the arrangements for London, and in particular the institutional or, possibly, constitutional arrangements. I should declare an interest as a member of the London Assembly, part of the Greater London Authority. Some years ago, at the time the learning and skills councils were established, I remember being critical that five of them in London had boundaries that were not coterminous with any other sub-regional grouping. The Learning and Skills Act 2000 was, in fact, going through at the same time as the Greater London Authority Act. There appeared then to be little joining up of the two sets of proposals, as I was reminded this morning by my noble friend Lord Tope. Our concerns then were justified.

I cannot speak with anything like the same authority as other noble Lords about the importance of training and education. Indeed, I do not believe it is necessary to make the case for skills. The argument is normally based on economics, but it is important too at a personal level. The frustrations at not being able to do something—and, conversely, the satisfaction in achievement—are often considerable. In London, there are often great contrasts. The highly skilled and highly paid are cheek-by-jowl with those who are struggling.

For myself, I admit to a lack of facility with languages. I once bought an ice-cream in Switzerland. I asked for it in French and the reply from the street vendor was in English. I do not think that we can offer that sort of tourism provision in this country. I heard recently of an Englishman buying a coat from a street market in China. The stallholder went to look for the right size, leaving his young assistant, who had been speaking Mandarin to her colleague. She talked to the purchaser in English, then Russian and French, but her Spanish left him stumped. In some ways, that still-developing economy is way ahead of Britain.

London is a powerhouse of the UK economy, so it is particularly important that we get it right here. In the Thames Gateway, 19 per cent of the working-age population have no qualifications and only 15 per cent, as against 25 per cent nationally, have a degree-level qualification. I am told that 60 per cent of the new sectors of the economy require level 3 education and 40 per cent require degree level. In the London part of the Thames Gateway, 50 per cent of children live in workless households.

The Mayor of London and the Greater London Assembly are as one, which we are not always, in identifying the importance of upskilling—a dreadful word—as a high priority. London’s unemployment rate at 7.5 per cent is the highest in the country and its employment rate is five percentage points below the national average. We are also as one in supporting the devolution of skills powers in London to the mayor and so, I understand, were about 75 per cent of the respondents to the review by the ODPM, as it then was, on the powers of the GLA. We have devolved government and the capital has its own strategic level of government. It is not a model that I or my colleagues on these Benches would choose, but we have it. The GLA ought to be able to join up, integrate even, the facilities which support skills, economic development and many other matters; for example, transport.

The Bill gives a legislative framework, but only a framework. That little word “may” rather than “shall” is used in new Section 24B, which states:

“The Secretary of State may by regulations provide for the establishment of a body for”,

discharging functions in London. In due course, an amendment will be tabled to allow discussion of the provision and the Minister will no doubt give an assurance that that is what is intended, which I will welcome so far as it goes. The DfES press notice in July made it clear that, as part of the new package of powers, the mayor will be given a statutory duty to promote adult skills in London. The Minister will, I hope, be able to say when the draft regulations will be published. It is important for the Learning and Skills Board—the “body” of new Section 24B—and its strategy to be established on a permanent and devolved basis to ensure the highest level of long-term engagement. There is a fear—I suppose one could say this of any legislation—that it might be disbanded by a future Secretary of State.

The model of government that we have for London is a single-person executive with a scrutiny body. It is also important to consider accountability and transparency. The scrutiny arm of the Greater London Authority should be able to bring the board’s statutory strategy within the assembly’s powers to scrutinise and be able to question the mayor, not just qua mayor but also in his position as chair of the board, and to question other members. The scrutiny arm should also be able to bring it into line with its powers with regard to other strategies, which will be strengthened somewhat by the GLA Bill, which has just received its Second Reading in the Commons. It is not clear whether the mayor will have any power of direction over the new body. I suspect not because it is not that sort of body, but if it is the assembly should have a corresponding check and balance over it.

I will end on a less happy note. The membership of the new board was announced last week, following some negotiation between the mayor's office and the department. It is a board of 23 in which small or even small and medium-sized enterprises seem hardly to feature—there may be one person who works in the small-business sector. Many people in London work in small businesses. It may not be the majority, but more than 26 per cent of business employment is in businesses employing 10 or fewer people. Local authorities are not represented on the new board at all. They are big authorities which are not, by definition, all based in central London. Of course, their areas of responsibility are not unconnected. In these days of partnership that is short-sighted.

The board met for the first time last week in private—the press and public were excluded. That is not a good start to arrangements which I wish the best of luck.

My Lords, there are, as we have heard, several potentially controversial aspects of this Bill, to put it mildly, but I will focus mainly on an important lacuna. We in the Church of England and the other Christian churches are excited about this Bill and its prospect of wise and creative developments in the world of further education. We welcome the Bill’s raising of the status of FE colleges and giving them a certain freedom to respond to local demand. The skills agenda will be important in doubling the number of apprentices. We in the north-east of England have a long tradition of apprenticeship, but people often now complain that it has been eroded. I hope that this Bill will not only increase employer training, but insist on it.

I also hope that the Bill will be strengthened in relation to the encouragement of people with learning difficulties. That affects me personally through a close family member, who battles with epilepsy-related difficulties and who is right now holding on gamely to the rung on the ladder somewhere between FE and HE, and doing so splendidly. I hope that the proposed radical structural changes will not get in the way of implementing the LSC's report, Through Inclusion to Excellence. I endorse the hope expressed by the noble Lord, Lord Low, just now that the Government will, in due course, publish the relevant disability equality impact assessment and make it clear that those with learning difficulties, for whom FE is a lifeline, will not be disadvantaged by the effects of this Bill. A similar urgent point must be made concerning English language courses for asylum seekers and their children, of whom we in Durham have a fair share. I refer to the Children's Society’s work in that area.

Looking wider and coming towards my main point, I want to highlight the church's own experience in fostering education, not least among young adults. In my own diocese, that is well known. Bishops Cosin in the 17th century and Barrington in the 18th century were great educationalists and school builders. Van Mildert, the last of the Prince Bishops, used his townhouse, the castle in Durham, as the beginning of Durham University. I declare an interest as the visitor of that university.

Likewise, the first FE college, the Working Men's College in Camden, which is still going strong, was founded in 1854 by two great churchmen—FD Maurice and Charles Kingsley. Several creative educational partnerships between church and wider society were formed in that period and you do not make a tree more fruitful by cutting off its roots.

With this experience and memory, we in the church have sought to work with the FE sector in a whole raft of ways. Noble Lords may have seen our report, Pushing Further, which was debated in General Synod last February and the joint Anglican-Methodist publication on approaches to spiritual and moral development in further education. There are several other exciting current initiatives such as the DfES-funded review of spiritual, moral, social and cultural issues—SMSC—in colleges, and we are enthusiastic about the new project, All Faiths and None, funded jointly by the church and the LSC, which will develop pilot materials over the next two years for spiritual and moral development within colleges in partnership with humanist colleagues as well as other religious bodies.

In the light of this history and current work, I note that several people working today in FE are aware of a gap that needs to be filled. In last year’s LSC publication, Faiths and Further Education, the chair of the working group, Ruth Silver, notes in the preface that those working in FE know that they are doing,

“more than preparing people for employment and employability”.

They have a wider and deeper duty,

“to help … students and staff to develop a sense of well-being”,

as the foundation of the personal and emotional resilience they need for work and life in general.

This whole aspect of education is hard to define and easy to miss out when you are listing elements of classroom curriculum. When I was a school governor in a previous job, the inspectors one year said, in effect, “Great school, pity there’s no spirituality”. That precipitated a lively discussion between those of us who strongly agreed and those, including the head teacher, who claimed not to know what was being talked about. That is a symptom of a malaise. Our local LSC in the north-east admitted that there seemed to be a gap in its understanding of the link between faith and education and it has agreed to contribute more than £40,000 to research the whole area of spiritual and moral education among young people in the north-east. That will be approached on a fully interfaith basis, but the Church of England is perceived locally as a good lead partner because of our distinctive but inclusive approach to involvement in schools.

Many people today, not least young people, are a bit fed up with one-dimensional secularism and eager to explore the multiple dimensions of justice, spirituality, relationships and beauty—the SMSC agenda, in fact. We in the north-east—I was interested to hear what my neighbour, the noble Lord, Lord Sawyer, said about work in that same region—have seen young people enthusiastically embracing this larger agenda in local projects such as last summer's splendid NE1 initiative. The notion of holistic well-being, with its irreducible religious dimension, was recently highlighted in the important report from the Theos institute, entitled Doing God: A Future for Faith in the Public Square—a reference to something that was said in Downing Street a while ago. Although that document ranges far more widely than education, it is very pertinent to our concerns here today.

In that context we are concerned to strengthen this Bill. As our local north-east FE providers have agreed, more needs to be done to understand what different faith groups require in relation to prayer, diet and so on. Dealing with these on a needs-led basis does not get to the heart of the problem. We would be delighted to think that this Bill might go some way towards bringing colleges into line with schools in this respect and, if necessary, with some additional resources. One of our local principals said that he supported the whole faith and SMSC agenda, but that it would need fresh funding. Fair enough. But that is only the beginning.

Specific vocational skills are not the only ones that young people need to help them to take their full place in the workforce and society and engage in public life. This is particularly relevant today when, to most people's surprise, questions of religious belief, lifestyle and even dress style have been high on the public agenda. You cannot banish religious questions to the sidelines as though they were fit only for consenting adults in private. To face tomorrow's world, today's young people need a well-rounded wisdom which answers, not to the flatland fantasies of the secularist, but to the deep, multi-layered quest for an integration of proper and scientific study and skills with a supple spirituality which will infuse and permeate the whole. When people are not encouraged to explore these aspects of life in healthy and creative forms, they go looking for them in ridiculous and unhealthy places; hence the massive popularity of The Da Vinci Code. As the Archbishop of Canterbury has said, these are conversations that we need to have, as it were, “above ground”, rather than pretending they do not exist or do not matter and thereby handing a victory to the extremists with their campaigns and propaganda. Neither secularism nor fundamentalism, in other words, will help. We urgently need, today more than ever, to educate people into an informed understanding of religions and how they work, rather than avoiding the issue and colluding with a split-level world and the horrors that come in to fill the vacuum.

We in the churches in the north-east have increasingly realised that our involvement in FE does not just mean the provision of chaplaincy in the traditional senses, but the infusion of faith and SMSC issues into the curriculum at several levels, as indeed seems to be envisaged by the recent White Paper. There should be a duty to provide this. As I suspect that it was basically an historical accident that this element has been omitted, I very much hope that the Government will be happy to rectify matters.

The Bill offers an unparalleled opportunity for partnership not only in vocational education provision but also in the pastoral and citizenship areas. Faith communities, alongside representatives of all other points of view, are important potential partners in the equipping of young people to take a wise and informed place in public life. We in the churches look forward to bringing our history, experience, existing strategies and lively contacts into partnership both with the Government as they work on the current proposals and with local authorities as they implement them in due course.

My Lords, I declare an interest as the vice-chancellor of the University of Greenwich, which has nine partner FE colleges. Like my noble friend Lord Sawyer, I shall focus on the new power for FE colleges to award their own degrees. But before doing so, I should like to speak briefly about the main proposed changes to the Learning and Skills Council.

I detected a small difference of view between the Conservative Front Bench and the noble Lord, Lord Baker—

My Lords, the noble Lord may be able to persuade the noble Baroness, Lady Morris of Bolton. She seemed to be implying that 47 local councils was far too many and terribly bureaucratic, while the noble Lord, Lord Baker, suggested that many local interests need to be represented when it comes to delivering training.

My Lords, there is no dissension whatever. We are very much on the side of the local and against regionalism. I apologise to your Lordships' House if I did not make that clear.

My Lords, I am thinking of the noble Baroness’s reference to the comments of Baroness Blatch when the Bill creating the Learning and Skills Councils was introduced. She certainly did oppose the involvement of 47 local councils.

My Lords, is not the point of Parliament for people to have different views and for everybody not to sing from the same hymn sheet? The point of Parliament is to debate things. If the noble Lord, Lord Baker, has a different view from that of my noble friend on the Front Bench, is that not a good and healthy thing? A few fewer automata on the Benches of certain other parties in this House would be a jolly good thing.

My Lords, the noble Earl, Lord Onslow, is absolutely right. But it is also perfectly appropriate for somebody on the other side of the House to note that there are differences on the Conservative Benches. That is all that I was doing.

I have some sympathy with what both speakers on the opposition Benches said, because I am a little concerned about another reorganisation, and I see the case for ensuring that local interests are taken into account. However, I think on balance that it is the right time to move towards a regional structure. Perhaps the Minister will tell the House what savings will be made by moving down this route. I presume that there will be considerable staff and other savings. The new regional councils will have to work hard to ensure that they consider the range of interests from different localities in the areas that they cover.

My one reservation concerning the LSC is the proposal for a power to establish strategy-making bodies. Does the Minister believe that there is any likelihood of strategy-making bodies existing outside London? Have any discussions taken place in any other regions?

How confident is the Minister that there will not be constant friction in London between the strategy body chaired by the Mayor and the London regional Learning and Skills Council? Pages 5 and 6 of the Explanatory Notes read a little like a desperate attempt to anticipate possible areas of conflict. Can the Minister put his hand on his heart and say whether he or any other rational person with strong convictions about vocational education would want to chair an important regional committee without the power to determine its own strategy? It looks like a rather messy political compromise. It would have been sensible either to go a little further in handing over powers to the Mayor, or to leave the system in London the same as it will be in other parts of the country.

I turn now to my main concern: the new power in Clause 19 for FE colleges to award their own foundation degrees. My opposition to the proposal has absolutely nothing to do with a dismissive view of the FE sector. I believe passionately in further education colleges and their importance to our economy and education system. In the four years I spent as a Minister with responsibility for FE, the Government tried to raise its profile, strengthen its operations and obtain extra resources for it. That, incidentally, included an important new role for FE in teaching foundation degrees.

What the Minister said indicates that we are currently asking a great deal of our FE colleges, including vocational courses for 14 to 16 year-olds released from school; academic provision for 16 to 19 year-olds of GCSEs and A-levels; full-time and part- time vocational skills programmes for 16 to 19s; adults programmes of many different kinds; basic skills for both young people and adults with poor literacy and numeracy; engagement with work-based learning at many levels, as well as working with universitiesto provide foundation degrees and other HE qualifications. The Minister kindly referred to the fact that I was responsible for introducing foundation degrees. I never anticipated yet further widening the role of FE colleges so that they acquired from the Privy Council degree-awarding powers. Such expansion risks mission overstretch.

A university is, moreover, defined by its degree-awarding powers. FE colleges are not universities, nor should they aspire to take on the role of universities. They already have, as I indicated, many other vital roles. We must try to avoid muddle and confusion about their roles and those of universities. To imply that not many FE colleges may make use of the power and they must be high performing—however that is defined; I am uncertain what the Minister will say about it—simply will not wash. There is a very important issue of principle here.

What puzzles me most about the insertion of Clause 19 is what it seeks to remedy. Perhaps the Minister can enlighten the House further on that. What is wrong with the present system of partnership between universities and FE colleges whereby they work together to develop degrees, with universities validating them and offering progression to honours degrees? Can he give the House examples of colleges failing to find a university to work with them and to validate their foundation degrees? I would be amazed if there were any such cases other than where there were serious problems with standards. In a small number of cases universities have withdrawn validation because of poor quality; but as high standards are vital in the establishment of foundation degrees, that is exactly what should happen. After all, the DfES’ “Foundation Degrees” website states that foundations degrees are,

“validated by universities to ensure that they meet the standards of Higher Education”.

That is quite so. They are HE qualifications and were always envisaged as such. If there are instances in which current arrangements do not work as well as they should, surely it is better to find ways to make sure they improve, rather than change the whole system and undermine the many cases where they work well.

As other speakers have said, foundation degrees are still at an early stage in their struggle to gain acceptance among employers and potential students. Having been party to their invention I really want them to succeed; so I beg the Government not to do anything that will jeopardise this important route to widening participation, to progression and to employability achieved through working directly with employers. After a slow start they are now growing faster and acquiring the status they deserve. That validation by universities helps to secure that status.

While being wrong in principle, Clause 19 also has a number of unintended consequences, as the noble Baroness, Lady Sharp, and other noble Lords have said. I do not want to whinge about lack of consultation. I have sat too often where the Minister is sitting to know that that does not get you very far. However, it is always better to ask around before introducing a new power of this kind, if only to become aware of the consequences.

The most worrying aspect is that the clause threatens partnership arrangements between FE and HE. Many universities have spent a great deal of time and effort in developing collaborative relationships with colleges, including allocating to them their own HEFCE numbers for foundation degrees. What will happen next? Will universities have to compete rather than collaborate with their partner colleges, which are using the universities’ HEFCE numbers; or will universities have to withdraw these allocations from the colleges and try to devise ways of teaching their own foundation degrees, or, failing that, leave the places unfilled? Surely the Government do not want that to happen. What will happen to the guaranteed progression to honours degrees that the present system offers? This proposal is immensely disruptive and provides no obvious advantage.

What will Ministers say when they host the next stage of the Bologna negotiations in London next year? There is a real danger that they will be criticised for devaluing degrees. The UK HE brand could be damaged and our position weakened in these negotiations. We should take that seriously. The noble Baroness, Lady Morris of Bolton, said that FE colleges are over-regulated, with 17 different bodies overseeing them. I have sympathy with that view. This clause will introduce yet another regulator for FE colleges, the QAA. It will do nothing to resolve what the Foster report said about over-regulation.

What will the relationship be between this Bill when enacted and the 2004 Act? It would be helpful if the Minister replied to that. If FE colleges are to validate their own foundation degrees and presumably have their own HE places, will they set their own fees and, if so, will they be subject to OFFA agreements? If so, that would impose another regulator.

I will leave other speakers to elaborate further on the threats that this change poses to the relationships between higher education and further education and to the established boundaries between the two sectors and their regulation and inspection. I end by asking the Government to think again and, having thought about it, to abandon this last-minute addition to the Bill. It will create more problems than it solves and it leaves many vice-chancellors and their senior colleagues who support the Government’s aims in establishing foundation degrees deeply concerned.

My Lords, I declare an interest as chancellor of Coventry University. Many noble Lords will remember that, before it received university status, it was a famous polytechnic college that provided skilled workers for some of the finest engineering works in the country, both in wartime and after. It then received university status and now has some 18,000 students. It has been built up over time into a university that has to be reckoned with. It has a fine international reputation with students coming to it from various countries in the Far East and from elsewhere. I know from the awards ceremonies that I attend that those students welcome the chance to spend time in Coventry and to feel part of the university.

At this stage in the debate we have covered a lot of ground. One listens with care to what people have said, and I do not wish to repeat what has already been said. I wholly support the opening statement by my noble friend Lady Morris and what has been said by speakers from this side of the House since. I would like to express my concern, and the concern of many who have approached me, about Clause 19. I will concentrate on that because the Minister referred to that clause in particular, and said that it was the Government’s intention to give further education colleges the power to award foundation degrees in their own name.

What does that mean? What effect will it have on universities and honours degree courses? These questions are being tabled and are of concern to many at the moment. I could say that we would like the Government to drop this clause completely, or at least, as the Minister said, apply some stringent criteria before further education colleges are granted their powers. Therefore, I would like the Minister, in his final remarks, to spell out a little more clearly what these criteria would mean.

I have four points of concern. First, if further education colleges are permitted to award degrees, surely the brand of UK universities will be weakened internationally. It could make it difficult for the United Kingdom to be part of the Bologna agreement on higher education. Secondly, does it not represent considerable “mission drift” for further education colleges, which were meant to be focused, as my noble friend Lord Baker said, on 14-to-19 level 2 or 3 provision, and adult level 3? Even foundation degrees, as I read and understand it, are level 4.

Thirdly, the proposal potentially drives a coach and horses through the partnerships built up between further education colleges and universities, rather than bringing them together on the basis of mutual development routes for learners, which is surely what we would all like to see. On the basis of the proposals, they would appear to be competing head-to-head instead of collaborating, as surely they should. In these cases a market solution is not necessarily in the best interests of learners or of widening the participation of students. It could jeopardise the lifelong learning networks, which HEFCE has set up and funded in each sub-region as consortia of universities and further education colleges. Finally, foundation degrees will be seen as further education qualifications, undermining their credibility with employers, where they are still a fragile new qualification.

Like many others, I was surprised to learn that there appears to have been a lack of consultation with the higher education sector generally. Nor has there been any modelling by the DfES of the impact on higher education provision in each sub-region, or any consideration given by Ministers or advisers to the secondary consequences of change. Surely that should have been going on long before we saw this Bill in order to debate it. I hope that the Minister can inform the House on those points and that, in particular, he will reconsider Clause 19.

My Lords, I share the doubts of my noble friend Lady Sharp of Guildford about why this Bill is before us now. Indeed, I can identify with some of the comments made by the noble Lord, Lord Baker of Dorking. This is yet another reorganisation of learning and skills councils. This point was raised by the noble Baroness, Lady Morris of Bolton; she gave figures, which I cannot at present recall. From my own experience, the learning and skills councils have, after a pretty shaky start, just about got into their stride. I have sympathy with those who believe that there are too many of them. Certainly, in their early days, they were incredibly bureaucratic, as the Minister said.

There is some muddled thinking about degrees from FE establishments. Clause 19 has been mentioned by almost every speaker today. Despite being co-chair of the University All-Party Group, I do not intend to dwell on that aspect tonight. I want to concentrate on what it is like for learners in the further education sector and to ask the Minister how educational opportunities will be improved for young people staying on in education after the age of 16 as a consequence of this Bill. Most of us recognise that further education provision is not uniform across the country. In some areas there is excellent provision, with plenty of choice and ease of access; in others, it is quite the opposite and falls well below the standard it is reasonable to expect.

I will start with the good. Earlier this year I was a member, as I had been for seven or eight years, of the board of corporation at Brockenhurst College, in Hampshire, in the middle of the New Forest. I attended it in the 1950s and early 1960s, when it was a grammar school. It then became a sixth-form college under the local education authority, then a further education college under the Further Education Funding Council, and then, most recently, an FE college under the Learning and Skills Council. Despite these ever-shifting sands of governance and funding, and due to a very good principal in Mike Snell—regrettably, now retired—it is among the top five colleges in the country. I know that the Minister has recently visited it.

Nearby are several schools with sixth forms. My noble friend Lady Sharp talked about the different amounts of funding per student received by sixth-form colleges in our area—quite a lot more. There are other further education colleges nearby, so there is plenty of competition and choice for students in academic and vocational courses. There are very good transport links in the area, though less so to the north of the New Forest. It is a very prosperous area, so many students drive to the college in their own cars, which used to cause great problems for us in finding places for them to park. There are plenty of job opportunities locally for those students who do not go into higher education. It is a densely populated area: the conurbations of Southampton, Bournemouth and Poole are less than 20 miles away.

Now for something completely different. For the past five years I have lived in Berwick-upon-Tweed, in north Northumberland. Since May 2005, I have been a Northumberland county councillor. For the young people who live in my division of north Berwick, the picture is very different from the one I have just described in Hampshire. There is one high school with a sixth form. The next closest high school is 30 miles away. The nearest further education college is 50 miles away, in Ashington, and the next one 67 miles away in Newcastle. Efforts to establish vocational courses in Berwick, particularly in building and associated trades, have not been very successful, despite support from local tradespeople, because the tutors, I am told, do not want to travel to Berwick from Newcastle.

The area has almost the lowest average wage in England, and the take-up of FE is one of the lowest in the country. Borough and county councils have both stated that raising aspirations is vital for the whole community and its economy. The population is very sparse, with fewer than 60,000 people in the whole of north Northumberland, so further education students must travel long distances, and the cost of this travel is high.

It is not clear to me exactly who is responsible for supporting students with the cost of travel. Over the years, the county council has provided support for FE student travel costs, but that is not a statutory duty. It has been increasing the amount that students and parents contribute, and this year it rose very rapidly from £235 a year to £360. The story does not stop there. For the students in Berwick, the situation has been made even worse, because the council has stopped altogether contributing to those students’ rail costs. Little do I think the county councillors realised what they were doing. Putting on buses means four hours’ daily travel for a student going to a FE college in Newcastle, when the train journey would have taken three-quarters of an hour each way.

Other counties in our region have claimed hundreds of thousands of pounds from the Learning and Skills Council to provide support for student travel costs, but for some reason, Northumberland County Council has failed to claim that money, and it has got very little from the Learning and Skills Council. I am very pleased that that is being looked at, but it is far too late for students this year. The take-up of FE out of Berwick has halved, and students who were halfway through two-year courses have given up.

Which is the body responsible for help with travel costs? Those travel costs are so badly needed in sparsely populated, rural areas. It is not clear to me; I have looked in the Bill. Perhaps a provision in Clause 6 can clarify how this can be dealt with. Secondly, I hope that the Minister can convince me that the Bill will reduce the inequalities that I have outlined tonight. Thirdly, I hope that he can look into how we can get much better opportunities for FE students in north Northumberland.

Only last week, in his Pre-Budget Statement, the Chancellor of the Exchequer laid great emphasis on the need for a highly educated and trained workforce. He emphasised the rapidly decreasing number of jobs for those who have no skills; indeed, the Minister also referred to that in his opening remarks. Today, in response to a Question by the right honourable Member for Berwick-upon-Tweed, Alan Beith, the Prime Minister flagged up the fact that the economy in the north-east has improved tremendously. It is stronger than it has been for a long time. Unfortunately, it is very challenging for the young people in the area where I live to join in that prosperity, and I have clearly described that for the Minister.

It is even more irritating to some of us because Scotland is four miles up the road. I believe in devolution, but again the picture is very different. I am not sure that I dare mention the Barnett formula. I apologise for being parochial, but I hope that the Minister will use this information to ensure that the legislation that is put in place is not too urban-centric. I hope that he is as concerned as I am to improve the prospects of young people in Berwick, in north Northumberland. The community’s economy depends on our young people being well educated and well trained.

My Lords, I shall be relatively brief. I want to raise one issue, which relates more to the White Paper than the Bill, but I believe it to be crucial to the success of the Bill in achieving its declared objectives. I understand that the declared objectives of the Bill are, first, to increase the employability of young people who have fallen through the net or who have, for one reason or another, missed out on the academic route, and, secondly, to increase equality.

In my view, there is one golden key, one talisman, and one general skill that can do more than any other to achieve the Government’s two objectives, whatever specific subject a pupil may choose to study. As far as I can see, that skill is not mentioned either in the White Paper or in the Bill. It is the ability to get on with other people and to communicate effectively. The communication skills of reading, writing and numeracy are mentioned in the White Paper, but there is no mention of the equally important skills of listening, understanding, speaking clearly and effectively, making a presentation, negotiating to a mutually satisfactory conclusion without anger, learning to work as part of a team and perhaps sometimes to lead that team. Those skills are sometimes referred to as the soft skills, but they are not soft skills; they are the key skills.

Many young people today who have lost out on the academic route have done so partly or wholly because of their inability to get on with their teachers or their peers. Sadly, many of them have done so because they did not get the chance to learn those skills in the family. The last hope that they may have to acquire those skills is through the further education system. If we genuinely seek equality, that group must be a prime target for help within the FE system.

It is not only the hard cases who would be helped to develop a successful and fulfilling career if their interpersonal and communication skills were improved. The Library has given me a mass of statistics, but I will not lengthen this debate by going into them in any detail. Of the 22 million people in employee jobs on a given date in 2006, 18 million were in jobs—including construction, wholesale, retail, hotels and restaurants, business activities, public administration, health and social services—that are impossible to do if you are not a reasonably good communicator.

In my experience, those interpersonal skills can be taught and can be learnt. Where they already exist, they can be improved by suitable practice, training and guidance, not so much by formal teaching but by activities, games and challenges, through confidence-building and the experience of working and learning together as a team. I agree with the Government’s policy that the choice and content of further education courses should be demand-led, but surely there must be some basic guidance and underlying rules. Indeed, the Bill reserves for the Government the powers to direct learning and skills councils, and I am sure the Government will also direct Ofsted about what they are looking for.

Can the Minister give an assurance that the Learning and Skills Council will be under an obligation to deliver key basic training in interpersonal and communication skills to all students under the guidance of well qualified teachers? I hope that he can give me that comfort; if so, I shall not have to delay noble Lords by bringing the matter back in Committee.

My Lords, unlike the Front Benches opposite, and like the right reverend Prelate the Bishop of Durham, I welcome the Bill. It is a technical Bill, but it is also a facilitating Bill. It improves the 2000 Act in a way that makes it more possible for us to work towards the targets set by the Leitch report. They are very ambitious targets given where we are at present but, as most people will accept, they are the minimum required if we are to match our international competitors.

As the Minister indicated, there is much in the Bill to be welcomed. Unlike the noble Baroness, Lady Morris of Bolton, I particularly welcome the intention for the powers to be devolved down. I do not think that it is a centralising Bill; it is a devolving Bill. The Government are to set the overall national objectives and then powers will be devolved down to the national and regional LSCs to develop strategies.

I hope that the Secretary of State will not be too prescriptive in how the objectives are to be realised. Equally, I hope that the national LSC will give much greater scope to the regional LSCs than does the present bureaucratic body and that after setting annual budgets the national LSC will allow flexibility and financial virement to the regions to enable them to develop appropriate strategies. I also hope that care will be taken in making appointments to these bodies. Those appointed should be familiar with the problems of the region and with the education and discrimination problems mentioned by the noble Lord, Lord Low.

I approach the Bill from a regional perspective, particularly from a Yorkshire and Humber viewpoint. In Part 1, Clause 4 gives the Secretary of State new flexibility in allowing bodies other than the LSC to formulate strategies. London, in particular, has been mentioned because of its acute problems. Like the noble Baroness, Lady Sharp, and my noble friend Lady Blackstone, I believe that there are other areas that would qualify under this clause. What will be the process for promoting this flexibility to those other areas? I have in mind, of course, the Yorkshire and Humber region, which has its own very real problems. There is under-performance in that region on all the key indicators.

In its regional strategy, Yorkshire Forward is addressing this historical, cultural and industrial inheritance. Progress is being made to close the gap between the region and national averages, but we are not yet there—let alone meeting anything like Leitch targets. There are historical, cultural and industrial problems still to be overcome, especially in those parts of the region where industries have been run down and we are trying to re-industrialise.

In some of these areas there are entrenched anti-learning and anti-education views, especially about continuous learning. After all, the previous experience has been that you learnt either by sitting by Nelly or by watching Jimmy. Real educational and training progressions have not been experienced. Often, this covers the generations of a family and it is not just confined to elderly people. Nor is it confined to families alone. There is also a lack of demand for training from some employers, thus denying the Leitch employer-led approach. Employers operating in low added-value markets have no intention or incentive to finance training or utilise a more highly skilled workforce. This needs to be addressed in the regional strategy.

On the other hand, there is a tremendous resource in the region. The eight universities produce excellent, employable graduates—40 per cent of them come from the sciences and engineering. Most of the graduates, however, seek careers outside the region. The universities and employers are aware of this and are working with Yorkshire Forward and the LSC to try to address it. An increasing number of regional students, many from ethnic communities, could help to stem the leakage.

Another encouraging sign is the success of school non-achievers—children who have left school without qualifications but are gaining level 2 qualifications during the 16 to 19 period. This is catching up to a low level instead of building on the achievements of schools. The new qualification to be phased in from next year could be a great help in this respect.

I am sorry if all this sounds negative. It is not meant to be. It is a question of facing up to the realities of a region where traditional industries have collapsed and where we face new problems. Of course, there have been some great successes in the region: the development of new industries; the building of critical masses and industrial clusters; and so on. For example, there are areas in North Yorkshire that exceed national averages. In South Yorkshire—one of the areas that has suffered greatly from industrial collapse—the National Metals Technology Centre, based at the Advanced Manufacturing Park in Rotherham, is succeeding well. These are all factors that are being built into a broad regional strategy, embedding the supply and the demand of education and training, together with innovation, into a high priority.

There can be only one overall strategy within a region. I suggest that this requires an RDA approach with a strong LSC input—not the other way around. I suggest that this could be more clearly recognised and written into the Bill. I would like the Minister’s comments on that point.

I turn briefly to other areas. First, I endorse all that has been said on Clause 19. This is a wrong move and I am in complete agreement with what my noble friend Lady Blackstone has said, and with what, I am sure, my noble friend Lady Warwick will say, on this.

I am also concerned that the Bill does not give enough priority to the very real problem of dealing with the 70 per cent of the workforce that is already in employment and will be so in 2020. Their retraining and reskilling should be a top priority. This has not been the case under the current LSC strategy, where the balance has favoured the 16 to 19 year-olds. We all want to give 16 to 19 year-olds a proper opportunity, but given the declining numbers in this age group, and therefore their declining significance in the labour force, we need to bring about a greater balance. This point is not fully addressed in the Bill.

We will deal with other aspects of the Bill at later stages. Overall, I think the Bill points us in the right direction.

My Lords, I declare an interest as a professor in higher education. My opening point is a general one and concerns the form in which legislation is presented. Where a Bill amends extant legislation, it contains clauses that substitute provisions for those of the earlier measures. This can make it very difficult to grasp the precise effects of a clause, especially in the wider context of the legislation being amended. Indeed, were it not for the welcome introduction of Explanatory Notes, it would on occasion be impossible to know what the effect of an amendment is or at least what it is intended to be.

The Bill is an excellent example of the genre. As the noble Baroness, Lady Lockwood, said, it is something of a technical measure. It has 33 clauses. If we leave aside the last six clauses, which are essentially standard clauses dealing with commencement and the like, we are left with 27 clauses. Of those, only three are free-standing clauses. The rest repeal or amend legislation. Their effect can sometimes be gleaned from the way in which they are drafted, and the Explanatory Notes explain, albeit briefly, the effect or intended effect. The notes, however, are no substitute for seeing the provisions alongside those that they are amending or replacing.

The Constitution Committee, in its 2004 report on the legislative process, recommended the greater use of Keeling-like schedules so that the effect on the amended Act or Acts could be clearly seen. It strikes me that this Bill would have benefited from such a schedule being appended to the Explanatory Notes. Can the Minister tell us whether consideration was given to producing such a schedule for the Bill, and, if not, why not? It is a question that I may well ask when other Bills of this nature are brought forward. It is important that departments get into the habit of thinking about whether Keeling-like schedules are appropriate.

Before I turn to the specific provisions of the Bill, I shall make some comments about the contribution of further education. I agree with the view, expressed in the White Paper, that FE has delivered a great deal and that what it has achieved is not that well known. As the Foster report noted, the FE system does not enjoy a high profile or a strong reputation compared with other parts of the education system. The Association of Colleges is seeking to raise the profile, but FE is still seen as something of the poor relation of the education sector. It is a misplaced perception. FE makes a major and successful contribution to educating a large proportion of the population, although I agree with the White Paper—a point reiterated by the Minister—that the need to maintain our competitiveness internationally means that we have to continue to improve what FE, and indeed our whole education sector, delivers.

On the Bill, I agree with those speakers who have queried the timing of its introduction. Why has it been introduced now, without waiting to integrate the recommendations of the Leitch report? I agree with my noble friend Lady Morris of Bolton and the noble Baroness, Lady Sharp of Guildford, that it is a lost opportunity. Parts of the Bill may need to be amended in the near future. It is not, it has to be said, a shining example of joined-up thinking.

I turn to the provisions of the Bill. The changes made to the Learning and Skills Council are designed as a means of providing greater strategic leadership, and, in so doing, they also serve to reduce some of the regulatory burden. Anything that improves or reduces regulation is to be welcomed. I note, however, the concerns of the manufacturers' association, the EEF, that the provision of a single LSC strategic partner may result in a “minimalist” service, as well as those of the Local Government Association that it moves away from local engagement. It is a case of getting the balance right. There needs to be strategic leadership while retaining the capacity to shape FE provision to meet the needs of the locality and local employers. Clause 7 may be the means of providing that balance, but it is an enabling clause, so a great deal will rest on the guidance. It may be helpful to hear the Minister's views on what it is intended that the guidance will cover and, indeed, whether he believes that the clause should be amended to meet the concerns of the LGA, the National Institute of Adult and Continuing Education and the noble Lord, Lord Low of Dalston.

For reasons of time, and because others have addressed it, I shall deal only briefly with Clause 19. Like others, I am not sure where this clause has come from. It was not foreshadowed in the White Paper and, as the noble Baroness, Lady Sharp, mentioned, it was not in the Foster report. Perhaps the Minister can explain what consultation has taken place and what other options were considered. The Minister has explained the problem that the clause is intended to address but not why this provision is preferable to the alternatives. The AoC has made the point that very few FE colleges are likely to seek degree-awarding powers. The Minister said that it would be a minority, which is not quite the same thing. Given that, what thought was given to improving the speed and cost-efficiency of the existing process of validation, and what study has been undertaken of the possible consequences of the provision? I share the views of the noble Baroness, Lady Sharp, about the problems of international perception that may result from the terminology employed for the qualification.

It is important that degree-awarding powers are not pursued at the expense of other qualifications offered in the FE sector. There is the danger of pursuing what the NIACE refers to as a “signature qualification”. It is also important that the points made in the NUS’s briefing paper are addressed. I agree with the NUS that foundation degrees should be stand-alone degrees if that is what learners require but at the same time, where learners wish to proceed to higher education, there should be, as the NUS puts it, a “seamless transition”. Foundation degrees should serve as an effective, and attractive, conduit for progression to an honours degree. Employers need to have an input but so, too, do universities if foundation degrees are to provide the basis for going on to complete an honours degree. Indeed, existing arrangements give students in FE an advantage over those who progress through the standard route of A-level to degree.

If the Government are to pursue the proposal, several important recommendations that have been made, including by the NUS, will need to be considered. But, as things stand, we need a much more compelling justification for this clause. The case for it has been asserted, but not established.

Let me deal briefly with other clauses of the Bill. I am concerned at the range of powers and functions vested in the LSC. If one reads Clause 10 in conjunction with Clauses 14, 15 and 16, one can see the problem. On the one hand, the LSC is being empowered to expand its capacity to supply a range of services, such as HR functions and payroll administration, while, on the other, it is being given power to incorporate and to dissolve further education corporations. Will the LSC have both the skills and the resources to fulfil such a range of functions? What mechanisms are in place to ensure that the LSC will be fit for purpose?

On the powers of incorporation and dissolution, concerns have been raised about consultation and addressing the needs of students in the affected institutions. Will Clause 15, requiring the LSC to consider representations made to it, be adequate to meet the concerns about consultation? How much thought has been given to what will happen to students in colleges that are subject to closure? It will be helpful to have the Minister's response to the very genuine point raised by the NUS. There may be a need to incorporate safeguards in the Bill and, indeed, to consider slimming down the range of tasks that the LSC is empowered to fulfil.

I also note the concerns expressed by the NIACE about the abolition of the Young People's Learning Committee and Adult Learning Committee under Clause 5. Perhaps the Minister can explain why abolition is necessary.

To conclude, I agree with the observation of the noble Baroness, Lady Sharp, that the Bill raises more questions than it answers. Perhaps I should say to the Minister: discuss.

My Lords, from these Benches we welcome the thrust of the Bill and we congratulate Her Majesty’s Government on the general vision that undergirds it. However, like the noble Baroness, Lady Blackstone, I have great reservations on the matter of who awards degrees and for what.

If I may interpose briefly, noble Lords may like to know that our colleague the right reverend Prelate the Bishop of Portsmouth would have dearly liked to be in his place this afternoon, but a crucial stage in the treatment of his illness prevents it. He receives a bone marrow transfusion tomorrow.

Our concern is that identified in the contribution from these Benches to the recent debate on the gracious Speech: the historical anomaly which gives sixth-formers at school an entitlement to provision for their spiritual, moral, social and cultural development but which denies that entitlement to their counterparts who are studying in colleges of further education. Noble Lords will be aware that, in the Education Acts 1944 and 1988, this entitlement is established for pupils up to the age of 18. However, both Acts refer only to pupils in schools—hence, the perpetual casting of FE colleges in a Cinderella-like role so far as concerns SMSC, destined to be treated differently and as second best.

Why does the entitlement matter? First, the continuation of the anomaly suggests that those who study in FE colleges have needs that are different from and perhaps inferior to those who study in school. I suggest that this is manifestly not the case. If young people at school have needs that are met through provision for their spiritual, moral, social and cultural development, then so do young people in further education colleges. To say otherwise is instantly to create a two-tier system, something against which Her Majesty’s Government always set their face.

Secondly, spiritual, moral, social and cultural provision makes a powerful contribution to the creation of the cohesive society for which we all long. It is surely healthy for students to be able to explore the vital questions of identity and belonging openly and with one another in the structured and accountable environment of the campus. The alternative may be the lure of more single-issue extremist groups, which flourish in the absence of other, more balanced provision.

Thirdly, there is clearly a desire for the entitlement to be extended. Thirty colleges have begun to develop multi-faith chaplaincies since the publication of the further education White Paper earlier in the year. Responses to a joint review by the National Ecumenical Agency in Further Education and the Quality Improvement Agency indicate that over 90 per cent of those consulted were in favour of this extension. This Bill presents Her Majesty's Government with an opportunity for reform. An amendment extending the entitlement would enable the House to voice its confidence in our young people, their formation and their future. It would correct an historic injustice; it would build a stronger, more harmonious society; and it would answer a clearly articulated need.

I urge the Minister to give this matter his immediate attention and to tell us how such a simple and equitable amendment might be made. Why do I urge this so forcefully on the Minister? We need to remember that young people at this stage are in a vulnerable position. They are searching for meaning and purpose in their lives, and questions of vocation are vital: “What are my gifts? How can I use them creatively for the well-being of the whole of the community and not just for my own self-seeking ends?”.

What is the best framework that we can provide to ensure that these questions are faced in a supportive context? Young people on the point of entering an adult world—and we are talking here about a hinge moment in people’s development—are particularly vulnerable to the apparent clarity of single-issue pressures. We are all looking for opportunities to enhance social cohesion, to protect the vulnerable from inappropriate pressures and to coach young people in thinking beyond their immediate self-interest, in order to help them over that particular hump. Young people are allergic—and understandably so—to being told what to think. But supporting them in their spiritual, moral, social and cultural development cannot be an optional extra if we are planning for a future that values each person in a society for what they can contribute to the common good and to the whole.

My Lords, an enormous number of helpful comments have been made about the Bill. I will focus my remarks specifically on Clause 19, which would allow the Privy Council to give degree-awarding powers to further education colleges in respect of foundation degrees.

I begin by reinforcing what many other noble Lords have said, which is that foundation degrees have been a great success story. Here I declare my interest as chief executive of Universities UK. The foundation degree is a very new qualification. As the noble Lord, Lord Plumb, indicated, in some ways it is still quite a fragile qualification, but none the less a successful one, which was first offered in 2001. Since then, the number of students taking foundation degrees has grown from 4,200 to the latest figure of 47,000. Indeed, I understand that Foundation Degree Forward anticipates that something like 60,000 foundation degrees will be awarded in the current year. The current arrangements are therefore well on the way to delivering what the Minister hopes to achieve—100,000 by 2010.

Foundation degrees are a distinctive qualification. The requirement that employers should be involved in their design and delivery has provided an enormously fruitful platform for working relationships between universities, colleges and employers of exactly the type that the Government want to proliferate, a point firmly backed up by the Leitch report, which was published just last week and to which so many noble Lords have referred. Foundation degrees have provided a valuable catalyst for collaboration between further and higher education institutions. At Leeds Metropolitan University, for example, they have played a crucial role in providing the basis for collaboration between the university and 15 colleges across the northern region. My noble friend Lord Sawyer eloquently told the House how successful the University of Teesside has been and what this Bill might put at risk. Also, because the foundation degree has provided a bridge for students in further education or in employment with the world of higher education, the qualification has become a central plank in many universities’ efforts to widen participation, helping them to reach students who might otherwise never have considered progressing to university. We know that foundation degrees have a proven track record in delivering progression to higher education. Fifty-nine per cent of foundation degree graduates go on to further study, the majority at honours degree level.

So I can entirely see why the Government look at foundation degrees and ask, “How can we get more of this?”. I know that Ministers hope that by extending foundation degree-awarding powers to FE colleges they will encourage more institutions to offer the qualifications and increase the number of students and employers choosing them. But I do not believe that this Bill provides the right answer. Like others, I am disappointed that the Government did not consult on these plans before the Bill was published, because, like the noble Baroness, Lady Sharp, and my noble friend Lady Blackstone, I think that these measures may have unintended and quite serious consequences. I would not be surprised if some said, “Well, universities would say that, wouldn’t they? Isn’t this really an example of universities wanting to protect the degree brand and their markets?”. But I would not expect this House or indeed the Government to be swayed by those kinds of self-interested arguments. Many noble Lords have shown that there are very real concerns that go much deeper than that.

I also think that there is a real danger that Clause 19 could produce the opposite effect to the one that the Government intend. I think that it could lead to a reduction rather than an expansion in take-up of foundation degrees. I shall explain why. First, we know that the fact that foundation degrees have the word “degree” in their title and are awarded by universities is a powerful reason why students and employers choose them. The reputation of our universities for providing high quality plays a large part in the attractiveness of the qualification, even when it is delivered in collaboration with an FE college. On what evidence have the Government based their assumption that uptake of foundation degrees will increase if they are awarded by further education colleges rather than by universities?

Secondly, foundation degrees were originally conceived as a stepping-stone qualification that would enable students to study perhaps, or often, in conjunction with work or while based at a local FE college, but which would also give them the option of topping up to a full honours degree when they gained the confidence to do so. That built-in progression route, currently an essential element of every foundation degree programme, might no longer exist if the connection with universities is broken. That would be bad from the students' point of view, potentially narrowing their range of options, but it might also contribute to relatively decreasing the attractiveness of the qualification to potential students.

Thirdly, what incentive will universities have to continue working with further education colleges to develop and deliver foundation degrees when those FE colleges are liable to become direct competitors? I know that many other noble Lords have expressed that concern. Vice-chancellors have told me that the likely result of this move is that they will withdraw the support that they currently provide to colleges in delivering foundation degrees. The reason is that universities will not know which FE colleges are likely to seek their own degree-awarding powers, either immediately or in the future. My fear is that there is very likely to be a period of planning blight in which universities are reluctant to collaborate with FE colleges that might become their future competitors. Given that uncertainty, the pace of the development to which I referred earlier—the helpful development in foundation degrees—will slow. So there is a real danger that both the uptake and the provision of foundation degree places will contract rather than expand as a result of the measures in the Bill.

I realise that I may be painting an overly pessimistic picture, but those are all possible outcomes that, as has already been indicated, might result from the Bill. I look to the Minister for reassurance that steps can be taken to safeguard confidence in the quality of foundation degrees among prospective students and employers. If the Government are determined to make this change, it is vital that we have confidence that further education colleges will be subject to the same rigorous quality assurance mechanisms as universities. In reinforcing that point, I ask the Minister whether he agrees that the current criteria for degree-awarding powers should provide a starting point for developing the criteria for this new category of degree. Can he reassure me that the Quality Assurance Agency will have a role in monitoring quality in the institutions that gain degree-awarding powers under the Bill?

Finally, will the Minister rethink the provisions in Clause 19 that would allow FE colleges to validate provision in other institutions? I do not believe that this issue has been referred to by other noble Lords. In my view, not only would that increase the likelihood of mission drift among those colleges in receipt of these new powers, but it might also do irreparable damage to the reputation of UK higher education in what we all know to be an increasingly competitive international market.

I do not support Clause 19. I think that it could have a damaging effect, undoing much of the good that has been done in promoting collaboration between further and higher education. If it is to remain in the Bill, there is real work to be done to improve the current drafting. I look forward to taking part in that work in Committee.

My Lords, I shall concentrate on Clauses 2 and 3. I am puzzled by the hurry with which this Bill has been put forward and worried by the lack of clarity surrounding plans to restructure the LSC. How has this uncertainty come about? First, there is little or no guidance in the Bill’s Explanatory Notes, which state:

“The commitment to restructure the LSC was set out in the March 2006 White Paper ‘Further Education: Raising Skills, Improving Life Chances’”.

Paragraph 40, on page 11, of the White Paper states:

“To play the role set out in this White Paper, the LSC will strengthen its regional capacity”.

On page 84, paragraph 7.34 says:

“As part of its restructuring, the LSC is strengthening its capacity to plan and commission with partners … across the region”—

which I think should read “regions”.

“That will be backed up by a stronger non-executive regional structure. At local level, the LSC is establishing 148 LSC partnership teams, covering the same areas as local authorities”.

The next paragraph says:

“The strengthened regional and local tiers … means that the current structure of 47 local LSCs will need to change”.

We know now that Clause 3 defines the future of the 47 local LSCs not as change but as abolition. So far, nothing leads us to Clause 2 and regional councils.

What did we know about the existing nine non-statutory regional boards? First, that the LSC has expected them to become statutory, and now the Minister has said that they will. That makes for some clarity in amplification of new Section 18A, introduced by Clause 2, which, at present, leaves it to the Secretary of State to specify the number and geography of the proposed areas of England. However, as the noble Baroness, Lady Sharp, asked, what has happened to the 148 partnerships with local authorities? Presumably they will continue. The trouble is that new Section 18A is no more than an enabling measure, prompting questions other than, “Will there be nine?”. For example, under new Section 18A(3)(j), the Secretary of State can make provision for,

“the attendance of a representative of the Secretary of State at, and the participation of such a representative in, any meeting of a regional council”.

What will the representative do? Will he deliver the Secretary of State’s directions on the strategy to be followed by the LSC, as envisaged in new Section 24B?

It is almost as though the Government were using Clause 2 to think out loud; yet, only six years ago, all the usual and expected provisions for the 47 were set out in the 2000 Act, with the LSC retaining responsibility for much of the detail. Why is there a change in the arrangements for the nine? There is no good reason why the Government have not decided what to do, and not put it clearly in the Bill in the usual way. As the noble Lord, Lord Low of Dalston, said, the membership of regional councils is of great interest to Parliament.

It is unhelpful to present us with this widely drawn and unusual clause. It would leave too much discretion to the Secretary of State and too much doubt in the minds of the LSC and the further education sector. Left as it is, we would speculate, as would the LSC, because, despite the referendum in the north-east, regions remain the darlings of the Government. Who is to say which body will be reformed out of existence next in the pursuit of nine city-based centres of power? Will the Minister look again at Clause 2? Draft regulations are a poor substitute for provisions in the Bill. As it is, it is a pity that the confirmation of the nine was left until today. However, there is no need to stop there.

My Lords, I join noble Lords who have spoken in opposition to Clause 19, on foundation degrees. Others, such as the noble Baronesses, Lady Blackstone and Lady Warwick, have explained very well why this is a seriously wrong direction to take, so I shall not take up much time, but I hope the Government will think again.

I want to concentrate on the serious problems regarding the basic skills of literacy and numeracy, for which further education colleges, and therefore the council, have major responsibility. One cannot remind oneself often enough that those are truly the basic skills on which everything else rests. I must declare a personal interest: for a number of years, ending in 2002, I was chairman of the Basic Skills Agency, which, under the innovative leadership of Alan Wells, made many telling contributions to improvements in basic skills.

I realise that this has been a serious government priority from the beginning and that on the whole there has been good progress, especially in the primary sector. These educational issues figure frequently in your Lordships’ discussions, so I will not take up time on them, because more relevant to this debate is the area of adult basic skills. I must declare another interest as former chairman of the committee, to which the Minister referred, set up by the Government some years ago to improve the basic skills of adults. Our report, A Fresh Start, appeared in 1999, again with the Basic Skills Agency as a critical partner.

Most people knew that there was a problem, but most people, including the Government, were staggered by the horrifying situation whereby millions of adults were suffering from poor literacy and very poor numeracy. It is a complex picture, and I can refer only briefly to the findings. It is worth keeping in mind that our key criterion for what was called functional illiteracy and innumeracy was a level below what is expected of an average 11 year-old. On that basis, 7 million adults in England—one in five—were so affected, with more having poor numeracy. Clearly the country faced a massive problem.

With millions of adults handicapped by their inability to read and write, and to deal with numbers, something had to be done. Our report made many recommendations, and it is good to think that the Government accepted most of them. It was realised and made very public that those who liked league tables had to realise that this was a league table in which England came second from the bottom in Europe. Only Poland fared worse. The report had an enormous public impact and led the Government, not least through the priority and personal commitment of the Prime Minister and the then Secretary of State, David Blunkett, to work fairly quickly with a number of our recommendations. In fact, the Prime Minister called it “a crusade”.

Among our most important recommendations was the role of the FE sector. I say all this, not just to remind us of those stark findings of some years ago, but because the evidence is clear that the situation today still poses a major challenge for the Government, the council and, above all, FE colleges. I realise that reducing the number of adults so affected has continued to be a government concern and that there has been serious progress, but I must note that the statement in recent years that our earlier targets have been not only reached but surpassed is statistically misleading. I refer particularly to the 750,000 learners who were to reach basic skills requirements by 2004. It was announced that that had been achieved. That is seriously misleading. In the Skills for Life strategy, the target audience has been enormously widened to include everyone who does not possess a GCSE grade A* to C in English or maths, and so many, perhaps as many as half, of those who have reached the basic skills target are already way up the educational ladder and not part of the seriously disadvantaged group dealt with in our report, so that claim was misleading.

Against that background, I turn to the current facts. David Sherlock, the chief inspector and chief executive of the Adult Learning Inspectorate, who has already been quoted, wrote recently that the Skills for Life strategy is intended to tackle the problem, but:

“Despite nearly £2 billion of additional funding, there has been slow progress in tackling shortfalls in adult numeracy and literacy”.

He also says—and this is the key point—that the programme,

“is not yet meeting the needs of the most acutely disadvantaged adults it was designed to help”.

Present figures, mentioned by the Minister, suggest that in 2006 some 5 million working-age people still lack functional literary skills, and nearly 7 million—which I believe to be a serious underestimate—lack functional numeracy skills. The Leitch report refers to those points and makes practical recommendations, some of which follow those in our report of years ago.

I realise that this is not the occasion for reviewing the many policy areas which need now to contribute to solving the problem, ranging from issues grounded in social exclusion to all the years in school and, not least, in the work place. But they also mean a serious commitment from the further education sector as the key educational provider. Can the Minister reassure us that the “crusade”—the Prime Minister’s term—has not lost its impetus, as I suspect it has? Is there still the public commitment that so encouraged us after our report a few years ago? Another reason I feel discouraged is that Alan Wells, a long-term leader in this field, was allowed to leave his post as director of the agency, and the Government have just announced their regrettable decision to stop funding the Basic Skills Agency. This is a backwards step, given the innovations and independent thinking of which it has been, and could remain, capable.

I hope that, whatever the formal changes resulting from the Bill, basic skills will be given their necessary priority as the base of the pyramid—priority by the Government; by the council, with adequate resources; and, above all, by colleges. I would like to be reassured that the crusade remains in place and that this role of FE colleges will not be squeezed out by other new roles.

My Lords, I agree with the implications of others that this is not the most inspiring legislation that the House has had to consider. It is a necessary one, however. There is a time to tidy up previous legislation; with one exception, the Bill certainly does that.

I recognise the importance that the Government have given to the skills agenda and the great progress being made. Given the extent of the work, it is perhaps unsurprising that tidying-up legislation is needed. As noble Lords have said, the skills agenda is attacking failed education and school systems of the past and meeting the new technological and employment needs of the present. It is trying to build new institutions to deliver that. I want to start on a positive note by congratulating the Minister and a number of government departments for placing skills, skilling people and giving opportunity at the centre of the political and economic agenda for the first time. Long may it be there.

I suspect that a lot of us saw most of the Bill coming about three years ago. With the greatest respect to my noble friend Lady Blackstone, I must say that, although the LSC as set up was really good, the structural difficulties with having 47 councils and a fairly strong national council could be seen in those first 18 months. I am glad that we waited five years; it has given us time to reflect and ensure that we get it right this time. That is a tidying-up, and my only comment would be that I am still concerned about what is almost over-activity at regional level. We have seen lot of changes in what happens at regional level over the past five to 10 years. We now have powerful RDAs and will have powerful LSCs. We have, in many respects, more powerful government offices, especially with their directors of learning—I am not sure that that is the exact title. I say to the Minister that we need clarity at regional level, rather than too many bodies stepping on each other’s toes. I ask for assurances that the relationship of the new regional LSCs with the RDAs and government offices will be clearly marked out.

I suspect, however, that Clause 19 will be the only really contentious part of the Bill, making it something other than a fairly boring piece of legislation. I, too, declare an interest, both as pro-vice chancellor of the University of Sunderland and a member of the governing council of Goldsmiths College in the University of London. I cannot think of too many new arguments to add to those that have already been made. Given that there was so little debate on the proposal before it came to your Lordships’ House, I hope that numbers might be counted up and a message sent back to the department that an awful lot of noble Lords felt that this was a great mistake. I therefore apologise if I am about to repeat some of the arguments, but they stand repeating to add weight to the numbers and the strength of feeling in the sector and the House about how wrong the Bill would be.

Over the past 18 months at the University of Sunderland, I have had the pleasure of seeing the strength of the partnership between colleges and our university. One of my roles there is to build links with the community, colleges and schools. It works very well indeed, and we should celebrate the fact that universities have taken on the Government’s agenda of widening participation and building links with the wider learning and geographical communities. That is a mammoth change from the ivory towers of 15 or 20 years ago. The Government have asked them to do that, and building those relationships with the colleges has taken a lot of patient work, trust-building, resources, time and energy. It has meant that vice-chancellors and those in universities and colleges have had to prioritise that relationship. It has been done, and it has worked. Nothing the Minister has said calls that into doubt.

I am convinced that that relationship would be jeopardised if colleges were given powers to make their own degrees. First, the incentive will go. Secondly, whether we like it or not, further and higher education would be moved into marketplace economics. That generosity of spirit, where people do something just because it is right, tends to get squeezed out in the marketplace. People will look carefully at where their money and time will be spent and conclude that this is risk investment for their own institutions.

At every graduation ceremony at Sunderland, we have about 100 students walk across the platform to receive their foundation degrees. Because they have a degree from the University of Sunderland and walk across our platform at our graduation ceremony, it is so much easier for them to come the following year and—if you like—finish off their degree and get a BA. We know that the trick to widening participation is giving people confidence to enter new institutions and types of institutions. That is why the Government spend so much money getting universities to work with schools: people get nervous if they have never done it before.

First, the Government have completely underestimated the power of the relationship between universities and colleges in making the move from foundation degree to college seamless. Secondly, as my noble friend Lady Blackstone said, foundation degrees are a success but are not really embedded in the educational landscape. To be honest, three years ago we were worrying about the numbers. People have had to work hard at making foundation degrees a success. Some things are wrong—people do not get a salary increase when they return to work; some employers do not value or pay for it—but none of them will be solved by giving degree-making powers to colleges of further education.

Do not rock the boat. Why change and give mixed messages to employers? We have just about got them to the point where we can say, “Hang on, we can breathe a bit easier now”. They are not likely to go away, but they need bolstering, looking after, caring for and nurturing. I do not see why or how changing the institution that validates them will help at all. I worry that employers and students will make a quick judgment that the degrees are validated no longer by a university but by a college and are not as good as they were or that it is an admission that they are not proper degrees.

Whatever the Minister says about that not being the intention, we are talking about non-academics who do not necessarily understand, or want to understand, the differences between universities and colleges. In our education system, universities validate degrees. That is simple to understand, and I do not know why we are muddying the waters. So I come to a question: what is it for? What problem is it solving? Where is the evidence that anything needs to be done? It will not help the student or the employer, and it certainly will not help the universities. So I have come to the conclusion that it helps colleges. If this is some sort of trade-off or offer to help colleges increase their status, I suggest to the Minister that we should not be doing that. We should tackle this from the skills agenda. Will it help improve skills? Will it help the status of foundation colleges? Will it mean more people go on foundation degree courses? Will it mean more progression to university? The answer is “No”.

Finally, there is no way at all that this can be contained by only a few colleges seeking permission for degree-making powers. It will become a badge of status. In his opening comments, the Minister said—the only thing he said on the issue—that not many would want it and it would be for high-performing colleges. Does any noble Lord know of a principal of a college of further education in this country who is not now incentivised to pursue it? Not to do so is to admit that theirs is not a high-performing college. Nobody will settle for less. It was the same with specialist schools and CoVEs and will be the same with double specialisms. Once you introduce the power as an incentive and a badge of good performance, you incentivise every institution in that sector to pursue it. That is the beauty of specialist schools. It is the beauty of CoVEs. They are incentivisers to high performance. The Minister has dropped in another incentiviser. To become a degree-awarding college will be an incentive that every principal worth his or her salt will pursue. It is a key decision. Once you open the door, you cannot close it to any college that reaches the standard. It cannot be number-limited; it has to be quality limited. There is no notion of how many may achieve that standard.

We have muddied the relationship between universities and colleges. I have always thought that the big problem for colleges is the difficulty in clarifying their relationship with schools because of our muddle over 14 to 19 year-olds. The one relationship that was clear for colleges was the relationship with universities. The danger now is that we shall make that interface between universities and colleges as confusing and overcrowded as that which existed between colleges and schools.

I differ from my noble friend Lady Warwick in only one respect. I do not think that at this stage we should offer conditions should the clause go through. If the situation is that serious, ill thought-out and potentially damaging, we should ask the Government to reconsider including it in the legislation rather than to mitigate it; otherwise, in five years’ time, this House will be considering again how legislation can sort out the mess that Clause 19 could bring.

My Lords, there is a wonderful book called Bluff your Way in Public Speaking, which has the advice, “Tell’em once, tell’em twice, and when they have heard it and relaxed, tell’em again”. So I shall repeat some of the comments made by noble Lords. I must declare an interest in the Bill as chair of council at St George’s University of London, where we are proud of the progress that we have made in widening access to medicine and the biosciences and in forging links to other HE institutions and local FE colleges.

Like others, I am puzzled by the timing of the Bill. No doubt, the Minister and his officials knew what was going to be in the report by the noble Lord, Lord Leitch, but most of us have had exactly seven days to digest its contents and no time in which to discuss it with colleagues and local partner organisations before the debate today. The Minister has a reputation for consultation and careful listening. We would have liked the time to do the same. Most of the Bill seems to be about the regional reorganisation of the Learning and Skills Council, even though, I note, Leitch cautions against time-consuming restructuring. Let no one mistake this: it will be an 18-month diversion from the job in hand and, as always, we risk losing some of the good work that is in train.

I am particularly concerned about the possible loss of progress for young people with a disability. The LSC launched recently its first national strategy for learners with a learning and/or physical disability in the FE system. The Disability Rights Commission is concerned that, with the radical structural changes proposed in the Bill, there is a real risk that the strategy will run into the sand. The Government have outlined an ambitious vision for improving the chances of disabled people. We know that, if a young person with a disability loses six months of education or training between 16 and 18, that is the single most powerful predictor of unemployment at age 21. The FE system has a vital role to play in achieving the Government’s vision for young people with a disability. I hope that the Minister will reassure us that a rigorous disability equality impact assessment will be published on the Bill.

Nevertheless, I understand the drivers to regionalisation, but larger geographical organisations often lose flexibility and local responsiveness. Are the Government sure that we shall gain more than we lose? If the Minister can say that he is sure, why are the changes in London proposed only on a temporary interim basis? Doesn’t London need more certainty and permanence about the arrangements, if it is to take the full benefits of regionalisation?

Like others here today with knowledge of the higher education sector, I am absolutely mystified by the notion of FE colleges being granted the power to award foundation degrees. We have several tiers of types of university already. Do we really want another layer of quasi-academic institutions producing qualifications called degrees without having to forge links to higher education? I grant that people say that the process is slow and expensive, so let us find ways of speeding it up. But it is often a matter of developing trusting relationships between organisations. Speeding up trust is rather a difficult matter. The finances are a matter for discussion between the Higher Education Funding Council and government.

There are other ways of solving the problem. The whole point of foundation degrees was that they were meant to lead on to opportunities for full honours degrees, but I fear that they will now become stand-alone diplomas without offering the real possibility of progressing up the learning ladder. I know that they are stand-alone qualifications at present for some of the reasons that the noble Baroness, Lady Morris, outlined. But who are we kidding? The students? The employers? If FE colleges can go it alone, they will. It is darned hard work creating close links between further education and higher education. This proposal jeopardises much good work that has been done.

Perhaps I may give two or three examples known to me locally that crucially involve higher education. First, from my own institution, St George’s, we have a health sciences foundation degree essentially to train paramedics from the ambulance services. The degree is delivered by Kingston University and St George’s in conjunction with local FE colleges and NHS ambulance trusts in south-west London. It is an example of how HEIs, even traditional elitist ones like medical schools, can get involved in luring people on to a career ladder where the sky is the limit.

My second example is the unique foundation degree in crime science and forensic investigation at Queen Mary College, University of London, to which I was formerly attached. It has a long and successful track record of working in partnership with business. Begun last year, the idea was born out of academic forensic expertise inside the university and from an existing biomedical collaboration with the excellent City and Islington College in London. The degree is taught jointly by Queen Mary and City and Islington College and is designed for students who wish to pursue a career as a scene of crime officer in the police service or as a serving police officer. It was developed in collaboration with the Metropolitan Police’s directorate of forensic services, offers scientifically robust training and develops skills in pure and applied biology that mean that the world is the oyster of the people coming out of that training course. That mix of expertise is possible only within the framework of this joint higher education/further education collaboration.

What have been the spin-offs of other foundation courses between Queen Mary and Tower Hamlets College? One of the spin-offs of the developing joint foundation degrees has been, for example, the links to all the schools in Tower Hamlets looking at curriculum development on a wider framework, in particular, as noble Lords will realise, because of the abiding deep interest of Professor Adrian Smith, the principal of Queen Mary, in improving maths education. Putting together foundation degrees has generated a profound collaboration in raising mathematics education in schools throughout Tower Hamlets. It would not have happened without some kind of incentive to such work.

Like others, I see no sense in creating competition for the awarding of foundation degrees when we have only just started on a collaborative approach that is already beginning to show real, tangible benefits for the local communities. I am seriously concerned that those collaborations will be undermined by Clause 19.

My Lords, before commenting on the Further Education and Training Bill, I declare my interest as the chief executive of London First, which has members from the commercial and educational sectors. It is from the perspective of fostering closer working relationships between business and education that I shall contribute to the debate. I shall begin by making some observations about the Bill and then move on to address briefly the broader skills issues that have been raised by the publication of the report by the noble Lord, Lord Leitch, and by the Chancellor of the Exchequer’s Pre-Budget Report last week.

Overall, the Bill represents a welcome, if relatively modest, step forward in enabling the further education sector to become more effective in providing the skills that this country needs to compete globally. Among its specific provisions, businesses and other employers will, I am sure, appreciate the move to open the market for government-funded training to more competition and hence widen the choice of training provider for learners and employers. However, an important proviso is that it will be vital to ensure that principals of further education colleges are given the additional powers and flexibilities that they need to respond to increasing competition. In short, a more open contest for skills provision on a level playing field is a good thing, so long as some of the players do not have one hand tied behind their back.

It is also good news that the Bill increases the ability of employers to guide the funding and development of training courses in line with requirements as they see them. It also seems a sensible development to provide for sector-wide training levies, where the majority of the employers in that sector support the proposal. There is a more general provision to ensure consultation with employers over the development of the Learning and Skills Council’s regional skills strategies. However, the process for that consultation is not defined in the Bill and, somewhat ominously, it will be covered by further guidance from the LSC. All too often, the large print giveth and the small print taketh away, and I hope that during the passage of the Bill, we shall have some assurance about the nature of the guidance.

I am delighted that the Bill enables the formation of the London Skills and Employment Board. Essentially, that devolves the responsibility for developing a London-wide skills strategy and steering the capital’s adult education training budget to a new board chaired by the mayor and with the majority of members being London business employers. That is a significant development, not only for London, where it will bring decision-making about skills training closer to the social and commercial realities of the capital but for the rest of the country, where it will provide a pioneering step towards devolution that I am sure others will want to follow.

The Bill provides the much-needed legislative basis for the board. I support the noble Baroness, Lady Hamwee, who noted that new Section 24B provides that the Secretary of State “may” provide for the establishment of such a board. I suggest to the Minister that substituting the word “shall” for “may” would deliver the Government’s stated intention of giving the mayor,

“a statutory duty to promote adult skills in London”.

To coin a phrase, that would be a small step for the Department for Education and Skills’s drafting department but would be a giant leap for the future of skills training in London.

My final point is to note with approval the Department for Education and Skills’s accompanying assurance, in the guidance notes, that no additional expenditure or manpower will be required to bring the Bill into force. However, I also note with some concern its estimate that up to £4 billion will be required for investment in the new shared support service systems described in the Bill. That is a significant figure in anyone’s budget, and I ask the Secretary of State to review the plans in this area particularly carefully to ensure that the investment is truly necessary and that the taxpayer is receiving a full return on investment.

The Bill, the publication of the Leitch review and the Chancellor’s Pre-Budget Report last week have once again brought to the fore the role of skills in creating and maintaining our national prosperity. I shall make three observations before I close. First, I welcome the conclusion of the noble Lord, Lord Leitch, that this country must develop a world-class skills training system that will enable our economy to compete with the best. I also share his view that our current skills system is not delivering what is required. It must be driven much more strongly in future by the needs of the job marketplace, and we must prioritise government spending to place a much higher value on the economically valuable skills that the noble Lord, Lord Leitch, speaks about so eloquently in his report. In that context, I look forward to Sir Digby Jones’s involvement as head of a new national skills and employment commission. The very phrase, “skills and employment” implies the Government’s intention to provide joined-up thinking and better integration between the Department for Education and Skills and the Department for Work and Pensions who are currently, so far as many businesses are concerned, working on disconnected agendas.

Secondly, I agree with the observations of the noble Lord, Lord Leitch, about our current qualifications system. In a nutshell, the system is far too large, obscure and detached from the jobs market. More than 22,000 vocational qualifications are recognised by the national Qualifications and Curriculum Authority, and more than 500 different qualifications are available in literacy and numeracy alone. So I strongly believe that the noble Lord, Lord Leitch, is right to emphasise in his report the critical importance of the employer as skills consumer. However, I fear that his recommendation to set national numeric targets for this country to achieve in level 2, 3 and 4 skills by 2020 runs exactly in the opposite direction. That represents a return to the centralised predict-and-provide approach and is couched in language that is understood by educationists but is incomprehensible to the wider world. The decision about whether skills policy in future is to be driven primarily top down and by central planning or primarily by the dynamic needs of the marketplace is the most important issue for the Government to address as they consider their response to the recommendations of the noble Lord, Lord Leitch.

Lastly, I shall quote briefly from a previous government report on skills and international competitiveness:

“We find that our most formidable international assailants are the best educated peoples ... For some time past, whilst we have advanced, they have advanced faster still”.

That was in 1884. The urgency remains.

My Lords, I shall address a number of points on Clause 19. I shall start by underlining the point made by a number of speakers—including the noble Lord, Lord Sawyer, the noble Baroness, Lady Warwick, and my noble friend Lady Murphy—about the dangers of putting at risk the achievement that is already in the system: the good partnerships between universities and FE colleges. There is a myth that that is largely, perhaps only, to do with post-1992 universities, but that is not the case. I was in King’s College, London, this morning—and I declare an interest as pro-chancellor of the University of London, of which King’s is a significant member—where concerns were raised with me about precisely this point. King’s has invested a great deal in linking up with FE colleges and putting on foundation degree programmes that integrate well with its own degree offerings as part of the wider college. The word “dismay” would be too strong because King’s is a robust institution with a robust principal and good leadership, but there was some concern and uncertainty about the messages coming from this legislation to institutions already in this business.

That being said, the core of my comments has to do with quality assurance in the Clause 19 proposals. Clause 19 covers the granting of powers to award both foundation degrees and honorary foundation degrees. I decided that it was a step too far to talk about quality assurance in the context of the award of honours, as that is a rather hot topic around this building these days, so I shall confine my remarks to quality assurance in foundation degrees.

There are two separate tasks in quality assurance: to assure the quality of the process in the education being offered; and to assure quality in what we used to call standards, which are now called outcomes. Those are separate needs that must be met in any adequate quality assurance programme.

It might be worth while to remind your Lordships how that works in the two parts of the education system that, so to speak, straddle the further education sector. The first is schools. There is a clear process for looking at how education is delivered in schools and providing an assurance of quality, and that is the mechanism of inspection. There is also a clear process for looking at how standards and outcomes are maintained across the system. That operates significantly through having a national curriculum and national external tests and examinations. In the school sector, those deal together with quality assurance in process and in standards and outcomes. In the university sector, quality assurance in process follows the academic audit route, which is the responsibility of the Quality Assurance Agency. Quality assurance in standards and outcomes is significantly the responsibility of external examiners.

People may argue about how effective such mechanisms are, but there are mechanisms in place that can be used to test the quality of what is being delivered in process and in standards or outcomes. In the university sector, significant tests are set also by professional bodies such as those for accountancy, the General Medical Council, the General Dental Council, the institutes of engineering and so on. There are professional bodies that to help determine and assure the quality of outcomes and standards.

One has to ask what equivalent processes are being proposed for the further education sector. I stress that there are two needs here: one is process, and one has to do with outcomes. Those have clearly not been thought through in any detail. Noble Lords would want some reassurance on how those processes are to be operated and indeed about what they are to be. I do not think that we can simply pick up the system operating in the schools or in the universities. However, there is a need to develop a means of assuring ourselves on process and on outcomes and the quality of both. Could the Minister—perhaps in his concluding remarks, but certainly in Committee—elaborate on how the Government envisage these processes taking place? If this system is to work—and I am not presently taking a view on whether we should go ahead with it, though it is clearly the Government’s intention that it should work—then quality assurance processes must be out in the open to give confidence about the system and to those who operate within it.

I have two final, short comments. One does not have to be a card-carrying church member to see the point of what our two right reverend Prelates discussed. I am not sure that I would agree with them on every detail of what social, cultural, moral and spiritual education amounts to, but there is an issue there that they are addressing. As a non-card-carrying church member I simply underline the importance of those issues.

Finally, I commend to the Minister the suggestions made by the noble Lord, Lord Baker, not simply about how Scots should vote—I do not know how that applies in this House—but about looking more broadly at the possibility of pilot studies of institutions operating for 14 to 19 year-olds in an integrated fashion. Now is the time for bold thinking. The Education and Inspections Act 2006 provides room to experiment with ways of conceiving new patterns of education. The 14 to 19 year-old bracket is worth thinking about very seriously indeed. I look forward to the Minister’s comments on quality assurance.

My Lords, I am glad to follow the noble Lord, Lord Sutherland of Houndwood, and I acknowledge his academic insights. I was also glad to hear the right reverend Prelates standing their corner in the field of FE.

I welcome the Bill and appreciate the Minister’s expert introduction. To improve the skills of young men and women and of adults in the 21st century must be one of the most important strategic objectives of any British Government. Surely one spur to the Government’s increasingly urgent and determined approach to the skilling, reskilling and upskilling of the British workforce must be the persistent decline of Britain’s manufacturing base. Today, manufacturing accounts for less than 15 per cent of our economy.

Under successive Administrations manufacturing in Britain has declined alarmingly. We face cutthroat competition in Europe while the challenge from the Republic of China, for example, is colossal. Wales, Scotland and our English regions will have a better economic future if this legislation is deployed in part to assist and promote our manufacturing industries. Are there plans for that? It is unnerving to observe the bidding by overseas companies for Corus plc, the remnant of Britain’s once supreme steel industry. Steel was the one-time foundation of our worldwide industrial pre-eminence. Do we not need manufacturing to create wealth, or some manufacturing to create some wealth?

In 1970, manufacturing employment was at its peak of 9 million; today, it is just over 3 million. Is it the aim of Her Majesty’s Government to use this legislation to end the erosion of Britain’s manufacturing base? However, it has to be said that our invisible City exports are priceless in their national value; that added value is a necessary clarion call; that collaborative ventures are the way forward; and that leading-edge technologies are priorities. But surely British skills and FE colleges can also be deployed to sustain Britain’s remaining manufacturing jobs.

I now offer the Minister a particularly positive report. Airbus UK manufactures the wings of thousands of aircraft, not least the giant futuristic A380 passenger aircraft. It has, in total, over 7,000 skilled and semi-skilled workers engaged on wing production. On its site, the airbus company trains 380 school leavers, 170 adult trainers and 25 graduates. That Flintshire plant is the jewel in the crown of north-east Wales and the north-west region’s economy; it is a huge earner of export moneys in a British aerospace industry that earns Britain more than £6 billion annually through exports, and which is the biggest employer of skilled labour in Britain.

On Monday, I was present at the Flintshire plant when the Secretary of State for Trade and Industry, Alistair Darling, pledged £35 million for research and development—a truly red-letter day for Wales and the north-west. The plant has a brilliant, youthful management team led by Mr Brian Fleet MBE, a training specialist, while Airbus UK’s managing director is the greatly respected Mr Iain Gray, who always promotes skilling and retraining. The company is, I believe, one of Europe’s biggest and best trainers. It should be acclaimed by this Government. In this, the Deeside further education college plays a central role. It trains hundreds of school leavers and adults on the airfield site in Flintshire and at the college. My compatriot, Mr David Jones, is its able principal.

Will this legislation enable further education colleges to enhance skills in our remaining manufacturing factories? What initiatives does the Minister have in mind to get more female school leavers into training and apprenticeships? Apprenticeships in this industry are the routes to well-paid permanent posts of very high status. However, there must be more for young women leaving high schools. Will the Minister spell out the consequences of his proposals for Wales, to which he made a passing reference? Will there be more discretion and power, as I think there will be? Wales is a mature democracy. The Wales Assembly Government have come of age and, I believe, are equal to the challenges. The Minister should be confident that Wales can deliver. Wales needs its remaining manufacturing—it has lost enough in steel and coal—but it has embraced skilling and retraining under the leadership of Mr Rhodri Morgan, the First Minister.

Overall, Britain’s manufacturing continues to erode. Are the Government sufficiently active in sustaining what we now have left? If they are not, manufacturing will end up like the fictional Cheshire cat, with just the grin. I believe that for Britain to remain a truly great nation in this century, we need a substantial, viable and wealth-creating manufacturing base, aided by excellent, constant retraining. In this cruelly competitive world, invisible earnings, service industries, supermarkets, call centres and foreign takeovers will not be enough to sustain our free schools, hospitals and pensions provision—certainly not in the generations ahead. More than that is required, and this Bill just might help.

My Lords, I welcome the opportunity to make a short intervention on this extremely important Bill. I will not detain your Lordships for long, because a good deal of what I wanted to say has been said with great eloquence by the noble Baroness, Lady Hamwee, from the basis of her own experience. I am particularly interested in the situation in London, where there are problems. There is a high level of unemployment—around 7.5 per cent. There are far too many low-paid jobs, and too many employers make use of immigrant labour in order to undercut wage rates. I am glad to say that union involvement has begun to get to grips with that situation and unions have begun to organise among such workers. The intention is to ensure that, through campaigns, employers will be prevented from exploiting immigrant workers. Of course, low skill levels influence employment, which is clear from our discussions today.

The Bill devolves powers to the Mayor of London, whose office has been in touch with me. The mayor welcomes the intention behind Clause 4, which will provide for the establishment of the London Skills and Employment Board, an employer-led board that will lead on the formulation of a strategy for adult skills and employment in London. However, this would be only a temporary delegation of powers to London, rather than the devolution of powers as discussed in the review, and it could be overturned by the Government at any time. While the mayor and the current Secretary of State agree on the need for the new board, a future Secretary of State could cut its powers and reject its strategy without the need for new legislation.

It is important for the board and its strategy to be given a permanent basis in London to ensure the highest level of business engagement for the board and to enable the new arrangements to develop long-term strategic plans for the capital without the risk of being disbanded by a new Secretary of State at any time. Depending on the response of the Minister, I think that it may be necessary to return to this point in Committee with an amendment.

The proposal for restructuring the Learning and Skills Council is particularly welcome. I understand that, during the consultation review on the powers of the mayor and the GLA, it became apparent that there was a broad consensus in London that the division of the city into five learning and skills councils areas had not served the city well. The approach to funding further education, training and skills development was inconsistent, random and lacking in strategic focus. The mayor argued that there was a need for a city-wide structure to address the pressing skills and employment issues facing London. The establishment of a regional structure allows for a more co-ordinated approach to meet the needs of London learners and employers. I listened with interest to the noble Lord, Lord Baker, who, unfortunately, is not in his place. I noted that he had reservations about regionalisation. As far as I am aware, London has no reservations. It welcomes the whole idea of the regional structure.

I was also interested in the comment made by the right reverend Prelate the Bishop of Durham. I do not decry the contribution that I am sure the church has made to further education, but we have already had a long debate about faith schools. With great respect to the right reverend Prelate, I do not think that it is appropriate to have “faith FE”, if I may put it that way. This is a very secular area and I would prefer, as would many people, FE to be regarded as a secular enterprise. It ought to be, because we are involved in skills training and so on, which essentially is a secular operation.

My Lords, perhaps I may say how much I welcomed the remarks made by the two right reverend Prelates, particularly because they associated themselves with the humanists. It is a change to see the churches and the humanists in alliance. I think that this is part of the development of the human being. I also welcome the comments made by the noble Lord, Lord Northbourne, on the importance of the art of listening and speaking, which we do every day and need to do well. The tragedy of education is that, if something does not score points on a certificate, it is not covered. The two Bishops and the noble Lord talked about things that matter which are not on a certificate, and it is important that they stood up for those things.

I have not studied Part 1 deeply, but I am instinctively a regionalist and welcome the approach. I am pleased that London is being seen as a region—it has major problems. In the constitution of these bodies, I hope that local authorities will be remembered as important contributors to an integrated approach. In a previous Bill, we talked about their strategic role in education. These bodies will be strategic and we need the involvement of local authorities.

There has been much discussion of Clause 19. Some years ago, I chaired a committee of inquiry into the future of higher education and we looked into a two-year programme. One of our central concerns, which is important today, was to maintain the value of the brand of a British degree in the interests of the student who earned it and paid for it—thanks to me—and in the interests of the universities and the nation. The British degree creates huge overseas earnings. It is one of our precious assets and I care very much that its standing should be maintained. That is not necessarily incompatible with a two-year foundation degree. That was not the course that we would have chosen—we would have preferred the HND, but there we have it—but I like the way it has worked out with the universities.

The Minister made some reassuring remarks about things that concerned me. He said, “This doesn't come with the rations; it has to be earned, and somebody”—the QAA, presumably—“has to be sure that the internal processes are sound”. I welcome that. However, I think that he said that he did not see many institutions wanting this change. If there was so little demand for it, why do we need to make such a major change? It might have been better to examine the particular issues that have led to this dissatisfaction in a small number of FE colleges, to see whether they could be addressed successfully without structural change.

One thing that I care and admire about foundation degrees is the way in which these institutions, working with higher education institutions, have articulated the route from foundation to the final stage of an honours degree. That articulation between the two is so valuable. Without it, I would see the qualification not as a foundation degree, but as something separate. I worry that, once the link is broken and some begin down this route, others will follow. When people see an opportunity to do their own thing, collaboration tends to fall into second place. There needs to be a clasping of hands between the FE colleges and the universities, and the arrangement must be built in to enable that. Otherwise, the link will be gone.

The Bill refers to consultation with students. I suggest that, if the Government pursue these proposals, students in the institution should be consulted on whether they should no longer have a university foundation degree but have an FE degree instead. They are working for that degree and I suspect that the link with a university can be worth quite a lot to them in the marketplace.

My final substantial point is the whole issue—and this is what Leitch was about—of lifting our endowment in skills up to the highest levels. We all know that there has been a problem, which has been hurtful and damaging to us, of the way in which anything vocational has been seen as second rate. The Government's proposals for the 14 new diplomas, which are major building blocks equivalent to four to six GCSEs, are a major initiative to provide a coherent, valuable and high-standing qualification that will be attractive to our young people. But I have some concerns. The diplomas must be well devised. There is a risk. I remember when design and technology was introduced into our schools. It was a bright idea, but the schools were not kitted out to do a good job. You would go into a classroom and quietly laugh at the thought that these things could be done in an ordinary classroom.

One thing that stands out about this Government is their commitment to education and to providing resources. What the Chancellor of the Exchequer has said on different occasions over the past year has been great. There is an opportunity, linked with the need for major reconstruction of our schools, especially secondary schools, and that is one thing that he is keen to finance. The money is there for a big rebuild programme over 10 to 15 years. The new diplomas need excellence to lift the whole standing of this major initiative, so that it attracts not only those who are not successful academically, but some of our ablest, most ambitious young people. Therefore, I want to associate these things with excellence.

I now turn to the proposal of the noble Lord, Lord Baker. There must be excellent qualifications, excellently taught in institutions that are capable of providing excellent facilities. They must be able to cover the full breadth and to do so through a continuum from 14 to 19, so that there is not a break point at 16 where people see that they can go. If there is continuity in one place, we have a better chance of succeeding. We are towards the bottom end of the leagues of nations for staying-on rates at age 17 plus. Through excellence, we have an opportunity to keep in the very people who are most prone to leave. We can raise the whole standard of this approach in people’s minds in first-rate technical colleges and technology academies in our major cities—perhaps 50 in total. This is an opportunity to change the whole way in which society values the vocational approach.

My Lords, at this stage in the debate I shall be very brief. I approach any policy decision in education, at any level from early years through to higher education, from the same standpoint with the same questions. First, how will this policy increase opportunities and raise aspirations and, indeed, increase social mobility? Secondly, will there be high standards that are set properly and monitored closely? In that context, I will talk briefly about the granting of foundation degrees, which has been the subject of much debate already tonight.

Like many other noble Lords, I am a huge fan of foundation degrees. Perhaps that is because I am the daughter of an engineer or because I grew up in the north east, like the noble Baroness, Lady Morris, but I saw many people travel successfully along the path of ONC or HND in the local techs and polytechnics, gaining skills and employability as they went. They were people who would never have gone to university nor did they have the qualifications to do so. To me, the great thing about the foundation degree is that it is the modern day version of that brood and offers the same chance of opportunities and same chance to get up the educational ladder.

As many noble Lords have already acknowledged, foundation degrees are new and still developing, but are becoming high quality. They are academically rigorous. They are designed in partnership with employers and delivered in ways that are interesting because they are flexible and innovative. They aim to get maximum participation from people who otherwise would struggle to take part at times. For example, many are part-time; any are done via distance and e-learning and are delivered partly in the workplace in many cases. These degrees are important as a recognised and valued qualification as they stand, in essence filling the higher technician level of education, but they can also be the crucial step on the next ladder to a full honours degree.

Nearly 47,000 students are studying for foundation degrees and there is a lot of support from employers across the sector. I have come across two. Airbus, about which we have already heard tonight, says that about 70 per cent of its top management team are ex-apprentices. The company is still looking for ways to get those same people through its organisation so that they get the skills at that level is run the company. Airbus is very committed to foundation degrees because it thinks that the rewards to the company are so obvious. In a completely different sphere, West Yorkshire Police say that because the degree is designed with them, it is a valuable investment because they are getting what they need. The sets of skills involved are very different, but they are getting what they need for the people that they are employing.

So far as my first question is concerned, I think that foundation courses fit the bill in terms of providing opportunities and raising aspirations. Like many noble Lords in the House, I want to see more of them. That is my starting point in this debate. I want to see them provided as efficiently as possible. There seems to be a real issue about the cumbersome nature of the present arrangements, so at the very least, we should be looking at ways in which they can be improved.

On standards, currently further education institutions wishing to award foundation degrees have to enter into an arrangement with a university or an institution with taught degree-awarding powers. At the moment, 79 per cent of those degrees are delivered through FE institutions and only 19 per cent are delivered through HE institutions. Many noble Lords are experts in this field; I do not pretend to be an expert at all in the fields of higher or further education. But it seems to me that we have a somewhat unwieldy and bureaucratic method of delivery that needs to be looked at.

The proposal to allow FE institutions the power to award up to foundation degree level should be considered seriously. I hear what other noble Lords have said—that the proposal has possibly not had that necessary consultation and that we have not had the comprehensive level of information that is needed. It is also perfectly clear that many FE institutions would not even wish to take up the option. Indeed they should not do so unless they are satisfied that it is a good thing to do. However, it seems that the new approach would allow colleges to react more quickly to the skills needs of the local economy. There is clearly plenty of scope around, with student numbers projected to reach 100,000 by the end of the decade.

Of course, we must focus on standards—that has to come first. I, like others, would want real assurances from the Minister that the Quality Standards Agency will be tough and rigorous in its judgments about whether an institution meets the necessary criteria. We must know that there will be absolutely no lessening at all of the robust quality thresholds that currently exist. But, if we get this assurance, we must be clear that we are taking decisions in the interests of students—not in the interests of universities or FE colleges. It is the students whom we have to focus on as we take the Bill through its stages.

My plea this evening, having listened to this debate, is that we demand the evidence and the assurances that we need on standards. We should take the proposals through the Committee in detail and not reject them in haste.

My Lords, this has been an interesting debate on what the noble Lord, Lord Baker, called a “damp squib Bill”, which is turning out to be much more contentious than the Government thought it would be. As the Minister said, the skills challenge for the UK is enormous—I think that we all agree on that. But we have heard tonight from the representatives of 10 fine higher education institutions about their serious concerns with regard to Clause 19. I must be almost unique in this House tonight in not having to declare an interest in either a higher or further education institution. But why did the Government feel it necessary to publish a Bill on further education a week before a major government-sponsored report on the same subject? Having looked at the Bill, we on these Benches have come to the conclusion that there is no need for it now. There is no need to rush into these measures. It would have been much wiser to wait, for reasons that have been expressed all over the House today.

The Leitch report has a number of important objectives for the UK to achieve by 2020, many of which will have to be achieved by our schools, underpinning as they do any attempt to lure young people and adults into further education and training. It is schools that must achieve 95 per cent of adults having basic literacy and numeracy. The reading recovery programme, which has recently been extended from a pilot scheme to a much wider programme, is a very welcome move in that direction. Without it I do not believe that we have a chance of reaching the Leitch target. The children who really struggle with reading are often those with particular learning difficulties, who need the expertise of a highly trained teacher to sort them out. That may be expensive in the short term but it is very cost effective in the long term.

The second Leitch objective of exceeding 90 per cent of adults qualified to at least level 2—an increase from 69 per cent in 2005—will also be achieved in major part by schools, although some of it will be achieved by or in close co-operation with FE colleges, especially when the new national diplomas come in during 2008. That is why the Chancellor’s announcement last week of more money for schools was so welcome. I am afraid that I have not had time to study how much of it is money already announced previously, but I would not be at all surprised if some of it was. What a pity that the funding gap between schools’ sixth forms and colleges was not addressed, as mentioned by my noble friend Lady Sharp.

The Leitch report is an important basis for policy development. Structural change should follow policy development, not precede it; so why reorganise the LSCs now before taking into account the proposals of the noble Lord, Lord Leitch. The watchwords of this Government seem to be, “When in doubt, legislate”. The noble Lord, Lord Norton of Louth, expressed concern about whether the LSC will be fit for purpose.

The Bill gives the LSC a duty to promote diversity, but this is more about diversity in the type of provider than anything else. Diversity in the curriculum offered is much more important than diversity in where and in what type of institution someone studies. In this situation, it is more important for colleges to concentrate on working with schools to deliver the new 14 to 16 diplomas and then the 14 to 19 diplomas on time than trying to become universities.

The changes in this Bill will have a major effect on the ability of young people with disabilities and special needs to access training and skills, as a number of noble Lords said, beginning with the noble Lord, Lord Low of Dalston. Already at 16, young disabled people are twice as likely not to be in any form of work or training as their non-disabled peers—and that number seems to be rising. Disabled people are twice as likely to have no qualification and, in a marketplace where the number of jobs requiring no qualification has halved in recent years, that is a disaster for them. Young people between 16 and 18 not in training or employment are highly likely still to be unemployed at 21, according to the Equalities Review.

Although the LSC recently launched its national strategy for learners with a disability, as has been mentioned by a number of noble Lords, the Disability Rights Commission and Scope, which have briefed us, are very concerned that with the radical structural changes proposed in this Bill the new strategy will be lost, with serious consequences for disabled learners. Scope would like to see the members of the LSCs obliged to take disability equality training before their appointment in order better to understand the issues. It would also like to see specific reference made to inclusion of disabled students in the choice and diversity part of the Bill.

Scope is concerned about the intervention part of the Bill in Clause 17, which it believes may contravene the Charities Act 2006 by giving power to the LSC to remove college principals and give directions to the governing body. Unlike most FE governing bodies, governors of Scope schools and colleges may be appointed by Scope’s executive council, and Scope is very concerned by the suggestion that the LSC might have the power to remove Scope trustees. Will the Minister clarify that point in his response?

Scope is concerned, too, about the duty in Clause 22 for college principals to obtain specific qualifications. While that duty is very welcome, can the Minister tell us whether that training will be available to private providers, such as Scope, and if so what the cost will be? We shall return to those matters and to others relating to students with special needs at later stages in the Bill.

Down to what age will the LSC have the duty to consult school children—prospective students—and will guidance specify that it must consult children with special needs as well as those without?

On the reorganisation of the LSCs, as my noble friend Lady Sharp said, we on these Benches welcome the fact that the Government have at last accepted our original proposal that they should be based on regions. But we are puzzled that there is no mention of local partnerships in the Bill. The Bill abolishes the local tier of the LSC, but nothing in it takes account of the need for regional LSCs to consult local authorities while at the same time the Bill repeals Section 22 of the Learning and Skills Act 2000, which requires local plans to specify what provision the local authority should make for further education. However, the White Paper, Further Education: Raising Skills, Improving Life Chances states in paragraph 7.37 that the LSC will,

“work with local authorities to ensure skills provision supports the local priorities”;

that is, in the local area agreements that LEAs make to support their economic regeneration. How does this translate into the Bill? It is not clear where the link is between local and regional planning. Do the Government envisage that this will be brought about by the powers in Clause 4 or perhaps through Clause 10? Perhaps the Minister will share the Government’s thinking on this matter.

This uncertainty prompts me to ask whether there will be conflict between local and regional objectives and, if so, how it will be resolved. The noble Lord, Lord Leitch, placed emphasis on post-19 provision being made via the private sector, yet there is unlikely to be cohesive leadership and planning from that direction. Strategies will be employer-led and not region-led if the noble Lord’s recommendations are followed. So where does this leave the LSCs?

Perhaps the Minister will explain the future role of local government in post-16 learning and skills; in particular, the funding and planning of provision in maintained schools, the funding and planning of adult education, and the local co-ordination of employment and skills issues and regeneration.

My noble friend Lady Hamwee spoke about the reorganisation in Greater London. Although welcoming it, she expressed great concern about the Assembly’s lack of ability to scrutinise the actions of the Mayor. She was concerned also about the lack of clarity and transparency and the composition of the London board.

On powers of intervention, Clause 17(2)(d) is open to wide interpretation. How will the standards of,

“performing significantly less well than it might in all the circumstances”

be set and monitored? Why not use the definition in Section 44 of the Education Act 2005 for a school causing concern? It is much clearer. As my noble friend Lady Sharp of Guildford said, why move intervention from the Secretary of State to regional LSCs if only about half the work done by colleges is funded by the LSCs? Where does this leave the so-called independent college corporations? Who pays any compensation for unfair dismissal if a principal is dismissed by the LSC? These are important points which we will no doubt explore further in Committee.

The powers to award foundation degrees are the most contentious part of the Bill, mainly because they were not consulted on. We have been lobbied by both Universities UK and the Association of Colleges, which take diametrically opposed positions. I accept that some of the arguments of both sides are valid. That only goes to show how very important it is to have a period of consultation and reflection. We need to test the allegations being made by both sides and the concerns that they express. The new power sounded attractive to these Benches and we gave it a cautious welcome when it was first announced—until we carried out the consultation which the Government clearly had not done before making the announcement. It is outrageous that this provision was put in the Bill about a week before publication with no consultation at all. Why rush? Why not look at the unintended consequences and take the Leitch report into account before proposing this measure to Parliament?

There also seems to be an inconsistency here. As my noble friend pointed out, if further education colleges were allowed to award their own foundation degrees, those would be the only qualifications that they awarded. None of the other qualifications awarded to students is accredited by the colleges themselves; they are accredited by organisations such as Edexcel, the RSA, City and Guilds or a university.

I understand that this proposal was put into the Bill at the last minute in response to complaints from a few colleges about the time and cost involved in getting a degree programme accredited by a university. As the noble Baroness, Lady Murphy, said, if it is a problem that universities are taking two or three years or taking too large a top slice, it should be dealt with by improving the system and not by legislating for a still very new tier of higher education qualifications to be delivered by institutions whose courses already range widely from NVQs through to A-levels, basic skills, HNDs, City and Guilds and foundation degrees. The noble Baroness, Lady Blackstone, listed the wide scope of what we already ask of our FE colleges.

My noble friend Lady Maddock spoke about the experience of learners and in particular about travel costs. We on these Benches want to put the interests of students, not the ambitions of a few colleges, at the heart of provision, as the noble Baroness, Lady Morgan, said. We need to retain and develop the co-operation that already successfully exists between colleges and universities and not set one against the other in head-to-head competition for foundation degree students. In the week when the Bill was published, a vice-chancellor said to me, “We will take our students back if that is what is going to happen”. The students were from one of the universities mentioned today but I shall not say which one. It has long been the policy of these Benches to give post-16 purchasing power to the student, so we welcome the learning accounts part of the Bill. There are other parts of the Bill which we welcome, too, as my noble friend Lady Sharp said.

The noble Lord, Lord Leitch, emphasised the importance of the portability of qualifications, not just in the UK but across Europe. There have been difficulties in getting our three-year degrees accepted through the Bologna process. In Europe, many degree courses last four years or even longer. Foundation degrees already muddy the waters simply by the fact of being called “degrees”, although we on these Benches support them and welcome the contribution they make to giving young people access to higher education. However, more than half of students taking foundation degrees already go on to take full honours degrees. That does not indicate to me that there is really any barrier to a student taking a university-accredited foundation degree in a college and going on to an honours degree in a university. I do not agree with the concerns of the noble Baroness, Lady Warwick, about that; I cannot see it happening. So why not leave well alone? Why rock the boat, as the noble Baroness, Lady Morris of Yardley, asked?

There is a very great danger of upsetting the balance of co-operation and competition between universities and colleges. Only a few colleges may currently be showing interest in getting accreditation to award their own degrees, but I agree with the noble Lord who said that such an ability will become a status symbol. They will all want it before very long. It may not upset the current balance if there are only a few degree-awarding colleges, but the balance will be changed very much indeed if they all have it.

That is why I do want to whinge about the lack of consultation. It is vital that we study the possible unintended consequences of a measure such as Clause 19. As it stands, we will probably see another Bill later this year anyway, as a result of the report of the noble Lord, Lord Leitch. Why not wait on Clause 19 and consult further? If the Government have to bring another FE Bill before the House later in the year, they can choose then whether to bring forward Clause 19, depending on the consultation at that stage. That would be a sensible way forward.

My Lords, I am mindful of the time, so I will keep my comments brief. I join all noble Lords in wishing the right reverend Prelate the Bishop of Portsmouth well.

This has been a very interesting debate. I am glad that so many Members of this House with experience and interest in this sector were able to join us. Their contributions to the Bill will be invaluable and I hope that we will hear more from them as the Bill moves through its later stages. Many noble Lords have raised concerns over the lack of consultation on Clause 19. I hope the Minister will reassure the House that he will listen closely to the highly experienced voices in your Lordships’ House.

The noble Lord, Lord Low of Dalston, and other noble Lords highlighted the need to ensure far greater access to education, employment and training for people with disabilities. I agree that providing access enables enjoyment of a whole range of other life chances. I think the noble Baroness, Lady Lockwood, misunderstood my noble friend Lady Morris of Bolton. She, like the rest of us on these Benches, wants to see more powers devolved to FE colleges. No one can argue that, alongside academic and vocational achievements, the development of interpersonal and communication skills is not crucial. The noble Lords who made that point offer great insight into why many sections of our community fail to aspire to, or have confidence in, any form of education or training.

The Bill is certainly in need of as much constructive criticism as this House can offer. On these Benches we want, as my noble friend Lady Morris said, to use the opportunity represented by the Bill to improve the independence, strength and flexibility of the further education sector. We find it extraordinary that the Bill contains nothing that would address the challenges before us, which the noble Lord, Lord Leitch, and Sir Andrew Foster before him, so clearly identified. Instead, this Bill takes steps to give yet more control to the LSC, an unelected, unaccountable body.

The one step taken that could improve the status of colleges—that of giving them the power to award foundation degrees—has been taken in a way which one would think was designed to cause divisions between universities and colleges. It has been done without consultation or explanation, and we are still in the dark about what standards will be applied to maintain the credibility of foundation degrees. As has been said so many times today, what will happen to the relationships that have grown up between colleges and universities? What effect will this have on students’ progression from further to higher education?

One area on which the Bill is extremely clear is the new powers that are being devolved to the LSC. Ironically, this is an area that the noble Lord, Lord Leitch, barely touched on in his report. Of course the complexity and confusion that pervades further education, with 17 different bodies overseeing colleges, has an effect on the provision these colleges can offer. When the funding application for a Train to Gain programme runs to over 100 pages, it is no wonder that we are not seeing the progress we would like. LSC complexity will only be worsened by the intervention powers in the Bill. We have been reassured by the Minister that these are merely backstop powers and that the LSC is being given the power to sack a college’s governing body or any of its staff only to encourage governing bodies to keep a watchful eye on their institutions. It is hard to see why these powers will be a more effective incentive when held by the LSC than when held by the Secretary of State. The Secretary of State has not used these powers once in the last 10 years. It is completely unnecessary to create yet another layer of guidance, reports and policy documents, and yet another threat for the LSC to hang over colleges’ heads.

This inability to trust colleges to manage themselves is the result of continuing disdain on the part of the Government for skills and vocational training. I found my noble friend Lord Baker’s calls for training to be made available to those over 14 extremely interesting. The only excuse for forcing children to remain in academic rather than vocational study, beyond the acquisition of core skills such as numeracy and literacy, is that the Government believe that vocational skills are only acceptable when other possibilities have been exhausted. Government policy seems to see vocational training as a last-resort intervention, only to be offered to people in danger of failing all other options.

For example, there is nothing in the Bill to address the continuing focus of resources for career guidance towards the young and low-skilled at the cost of adults and those wishing to train to higher levels. Again, that was identified by the noble Lord, Lord Leitch. The Bill should be about giving skills training the status and respect that it deserves by giving it an identity of its own; an effective preparation for the skilled jobs that this country desperately needs filling. We are already seeing the rapid decline of low-skilled jobs, not only in manufacturing but in the services. An ageing population makes it crucial that we give people of all ages the opportunity to reskill and upskill. The Government must stop relying on further education to plug the gaps left by the failings in the school system. It is appalling that so many young people are unable to read and write to the level of an 11 year-old, but it is not right that further education should pick up the tab to the exclusion of all else.

As my noble friend Lady Morris made clear, we believe that the way forward is not the control freak approach favoured by the Government. We must allow colleges to improve the status and relevance of the courses that they offer by responding flexibly to local demand from both students and employers. We must increase employer investment in further education. I do not just mean investment of money, but also of time and influence. Further education needs business experience and support; a real partnership where employers and educators together provide the best education possible for students.

If the Bill is anything to go by, the Government still have a long way to go before they really believe that further education colleges are to be trusted to provide the skills training that this country so badly needs. We on these Benches will try to improve the Bill as it passes through the House to take more account of the sensible proposals of the noble Lord, Lord Leitch. I hope that the Minister, now that he has had some time to assimilate the report, will respond positively to this effort to make the Bill an effective response to the challenges that his own Government’s reports have identified.

My Lords, I come to this Bill fresh from 70 hours in the Chamber on the Education and Inspections Bill, which involved my inflicting on the House 94 speeches, marginally more than the noble Baroness, Lady Walmsley, I think, although only just. Your Lordships can imagine the relish with which I embark on yet another legislative project this evening, only a month later. I was fondly assured that this would be a largely technical and non-controversial Bill. After piloting four Bills through the House in 18 months as a Minister, I know that while every Bill is largely technical—or, as the noble Lord, Lord Norton, put it, too technical and dense—there is no such thing as a non-controversial Bill. Perhaps it is just the case that I have never had the good fortune to be associated with a non-controversial Bill, which may say something more about me than about the intrinsic nature of legislation.

Let me simply say that clearly there are degrees of controversy. After 30 speeches, all but five or six of which have dwelt long and hard on Clause 19, I can see the contours of our debates ahead. I say right at the outset—because I appreciate the points that have been made about consultation, about the need to get into the nature of the issues at stake and about the impact on all the partners—that we want the collaborative arrangements that have been so carefully nurtured in recent years between universities and further education colleges to be furthered still.

The best response that I can make—though I will of course deal with some of the points raised in my reply—is to assure noble Lords that my honourable friend Bill Rammell, the Minister for further and higher education, will be delighted to meet all those Peers who have concerns about Clause 19. It will be quite a large meeting. He will be willing to do so before we go into Committee, so that we can go into these issues in rather more depth than I am able to do this evening. I hope that that will enable me not to have to give a detailed, blow-by-blow response from the pages of notes that I have here, since it is 8.50 pm. I hope that we can have an in-depth discussion about the implications of Clause 19 in that meeting, which will help to further inform the debate before Committee stage.

Leaving Clause 19 aside, I thought that there was a fairly broad, although not complete, consensus on how to proceed. After the opening speech of the noble Baroness, Lady Morris, I thought that it included agreement on the streamlining of the Learning and Skills Council. After the noble Lord, Lord Baker, had opined, we then discovered that it did not include agreement on that. I am slightly surprised that it does not, because I thought that the one thing on which we agreed across the House was the need to minimise bureaucracy and to cut waste and duplication.

I readily accept that the Liberal Democrats got there before we did and realised that we should have had fewer learning and skills councils. My noble friend Lady Morris said that it had become clear some time ago that this was the direction of travel in which we were moving. I do not think that I am revealing any state secrets when I say that we considered long and hard at the time whether 47 was the optimum number. My noble friend Lady Blackstone will well remember those discussions. We thought that we might want to consolidate in due course, but in the process at the time we thought it right to phase these transitions. Remember that we were moving from a much larger number of training and enterprise councils—the history of this is always important. We are also taking account of developments in the work of the Learning and Skills Council and of colleges since then.

My noble friend Lady Blackstone asked for the regulatory impact assessment of the cost. The effect of this is part of a process that will save an estimated £40 million in the administration of the FE sector—money that can then go straight to the front line for learners and for FE institutions. As the noble Baroness opposite will need a lot of money if she is to meet the spending commitments that her party has made, I would have thought that she would have grabbed the £40 million and not sought to keep in place the much more intensive bureaucracy in the FE sector that would be required to keep 47 learning and skills councils going. I will squirrel that one away, however, as I am always on the lookout for areas where I know that she is now committed to spending a great deal more money than we are.

My Lords, I am terribly grateful to the Minister for giving way. I was asking the Government what they intended to spend.

My Lords, I have given that assurance. We believe, based on our regulatory impact assessment, that these proposals will help us to save £40 million in the administrative costs imposed on the FE sector.

Having made that dangerously political point, however, I agree with the five key principles for action that the noble Baroness set out at the end of her speech, which she wanted to present as differences from government policy; I do not believe that they represent differences from government policy at all. In my mission to forge the strongest possible consensus, let me show how we agree with the principles by responding to each one

The noble Baroness’s first principle was that there should be serious investment in skills and training. Well, there has been a real-terms increase of 48 per cent in the FE budget since 1997, so our bona fides in that respect are clear. That includes massive investment in particular areas, raised so properly by the noble Lord, Lord Moser. Those areas are the foundation of all that we have to do in this matter, which is to improve the basic skills of the adult population—particularly the younger adult population—so that they reach that basic skills level without which it is almost impossible to function in the labour market today. That has all been made possible by this big increase in investment. I gave the figures in my opening speech. That investment will be sustained in future, too.

The second principle outlined by the noble Baroness was that we should seek to break down the rigidities that currently exist between further education, higher education and schools. We are seeking to do that in a very profound way. As I abstract it from this debate, I take it as a great tribute to the work that has been done in the collaboration between higher education and further education in recent years that such concerns should be expressed that anything could happen that might weaken that collaboration. I take to heart the comments made by my noble friend Lady Blackstone about the work that Greenwich does with its collaborative partnerships; the comments of my noble friend Lord Sawyer, who talked about the work of the University of Teesside in that area; the words of the noble Lord, Lord Plumb, on the work of Coventry University, which does excellent work with FE colleges, too; and the comments of my noble friend Lady Morris of Yardley about Sunderland. I particularly noted what was said about King’s College, London, so we are talking not just about the post-1992 universities, but about older, established universities as well.

This is all a tribute to the huge progress that has been made in collaborative work between universities and FE colleges, in an area, if we are frank, where there was all too little collaboration in the past. We have been seeking to break down that divide and we are very much seeking to break down the divide between further education, higher education and schools, too. That issue was mentioned by the noble Baroness and taken up as a theme by the noble Lord, Lord Baker, with his interesting remarks about vocational education in secondary schools and the need to institutionalise progression beyond 16. Although there are obviously difficulties in creating new institutions for pupils at a starting age of 14, given the pattern of our current secondary provision, the emphasis that he placed on students’ ability to progress in a predictable way at the age of 16, whether within a school with sixth-form provision or through much stronger, established collaborative links between further education and schools, was well made. That is, indeed, at the heart of government policy in this area.

Thirdly, the noble Baroness, Lady Morris, said that we should have a system that ensures that learners and employers have confidence in the quality of vocational education. We are definitely seeking enhanced confidence in the quality of such education. That is precisely why, for example, we are seeking to introduce, as the noble Lord, Lord Dearing, said,

“coherent, valuable and high-standing”,

vocational qualifications for 14 to 18 year-olds, which simply have not existed before. Work is taking place to develop the 14 specialised diplomas, the first five of which will be available from 2008, precisely so that high-quality vocational education is embedded in the work of schools, where, alas, it has been absent ever since the Education Act 1944, and we are seeking to unite both the school and the further education sectors.

My noble friend Lord Jones made a very interesting speech but, alas, we are leaving the Welsh to take care of their own policy in this area, so I cannot tell him what their policy is—he needs to speak to his colleagues in the Welsh Assembly Government. However, he raised an important point about encouraging female apprentices and about progression in this area. That is, indeed, important if we are to have the high-quality vocational provision that we want to see. Interestingly, the Box has told me that 47 per cent of apprentices now starting training are female and that the number of women apprentices has increased steadily in recent years, particularly—this is crucial—as more apprenticeships are offered in non-traditional sectors. So I believe that we can take heart from some of the progress that has been made in this area, and my noble friend is right to raise it as an important and continuing priority.

Fourthly, the noble Baroness, Lady Morris, said that we needed a system driven by choice on the part of learners. However, that is substantially the case within the constraint of places being made available. I defy the noble Baroness or any other Member of the House to start telling 16 year-olds these days where they have to study, what sort of courses they are expected to follow, and so on. This is increasingly driven by choice on the part of young people and also by older students. In recent years, that has been a strong move, and it will continue.

Fifthly, the noble Baroness emphasised the need to cut down on bureaucracy and regulation, but then, alas, her next move was to commit herself to a policy that involved more bureaucracy and regulation than we are proposing. But her five principles of action are ones that we share, and they go to the heart of the reforms set out in the Bill.

The noble Baroness, Lady Morris, the noble Lords, Lord Baker and Lord Dearing, and both noble Baronesses on the Liberal Democrat Benches mentioned the importance of links with local authorities and of established links penetrating further down than the nine regional councils. I stress that the structure that we envisage comprises the nine regional councils which have a statutory footing, but integral to the proposal is that there should be 150 local area partnerships. Although they are non-statutory—we want to attain flexibility; we do not want to over-regulate again, making something of the mistake that we made in the past in over-regulating what was a bureaucratic structure—these 150 local area partnerships are intended for the most part to mirror local authority boundaries. In that way, you get the advantages of both regional partnership and strategic leadership.

I take to heart the point made by the noble Lord, Lord Low of Dalston, that it is a great advantage for the voluntary sector and charities to be able to deal regionally with the further education bureaucracy, compared with having to deal with 47 separate institutions at a local level. So, with the 150 local area partnerships, we get the benefits of regional planning, strategic leadership and decision-taking in respect of skills needs, while we retain local flexibility and the feedback loop, which is so important in relations with local authorities. This means that, for example, instead of the local learning and skills council that currently covers the whole of Greater Manchester, there would be 10 local LSC partnership teams. Each one would cover a local authority and they would be grouped into three areas: the city of Manchester, Greater Manchester north and Greater Manchester south. Those sorts of arrangements would be replicated elsewhere.

A lot was made by the noble Baronesses, Lady Sharp and Lady Walmsley, and the noble Lord, Lord Norton, about powers of intervention as though what we were proposing here was some affront to natural justice that would not be properly regulated. Perhaps I may first stress, in order to further our debates before we go into Committee, that the proposals we have set out in the White Paper and the Bill follow closely those made by Sir Andrew Foster in paragraphs 105 to 109 of his report. Those specifically cover interventions, including bringing in new partners who could take over failing provision and having to make proper arrangements for students, which is essential, as the noble Lord, Lord Norton, said. They also include another college provider being empowered to take over the management of a college and the closure of a college. Many of these proposals were already set out in Sir Andrew Foster’s report.

The exercise of these powers by the Learning and Skills Council could take place only if stringent conditions are met and with evidence of failure being demonstrated. They are not arbitrary powers. We also have an Ofsted inspection regime and other means of analysing the performance of colleges. In order to exercise powers which, as the noble Baroness rightly said, are draconian, there would need to be a demonstration, which could withstand a legal challenge, that this was a reasonable thing to do in all the circumstances. That is set out in the Foster report.

The Learning and Skills Council will very soon publish its intervention strategy, which will set out its approach and the responsibilities of the LSC, the Quality Improvement Agency and colleges in dealing with poor performance. The intervention strategy will be published soon. I will ensure that it is made available before we go into Committee so that it can be a basis for our discussions on those particular powers. Indeed, in many respects, the proposals are quite closely mirrored by what takes place in schools, where again intervention follows Ofsted reports and has to be based on strong evidence.

The right reverend Prelate the Bishop of Salisbury raised the issue of the spiritual and moral needs of pupils, which is an important area. I echo what the noble Baroness said in the best wishes we send to the right reverend Prelate the Bishop of Portsmouth, who we are sorry cannot be in his place today. We believe it to be important that colleges consider how best to meet the spiritual and moral needs of their students. We emphasised this point in the White Paper, where we said that the governing bodies should consider how their pastoral arrangements meet student needs, including faith needs. I know that the Church of England has done excellent work with the National Ecumenical Agency in Further Education in developing guidance and support materials to help colleges deliver on this role. We have given strong encouragement to that work. However, we are not at the moment persuaded that a new statutory duty to promote spiritual and moral development would be a sensible step. We see further education colleges in the sector in a different position from schools in terms of the age range of their students. We do not believe it to be appropriate to impose the same statutory duties on FE colleges as apply to schools educating under-16s but we look forward to continuing this debate in Committee too.

The issue of foundation degrees has sparked much interest in the debate. Launched in 2001, foundation degrees were the first new higher education qualification introduced in 25 years and they represent a significant step-change in the design and delivery of degree-level education, bringing institutions and employers together to create a blend of academic and work-based learning. I should stress that they build on the concept of HNDs with distinctive benefits and they are a distinctive qualification in that sense—they build on a qualification which was not itself awarded by universities. The noble Baroness, Lady Sharp, quite rightly stressed that the HNDs are accredited by national awarding bodies. They have always been in a different position and they are foundation degrees—they are sub-degrees, they are not full degrees in the sense of what was understood by the word degree before their introduction. As my noble friend Lady Morgan said, 79 per cent of foundation degrees are delivered by further education colleges, which have close proximity in terms of geography and values to a huge number of learners and employers.

The proposals set out in the Bill are a sensible, incremental step which recognises the significant role that colleges play in teaching for foundation degrees. If colleges were to be accredited to award the foundation degrees in their own right, they would need to meet the QAA criteria. There would be stringent quality thresholds. My noble friend Lady Warwick was particularly concerned about that issue. The letter dated 23 November from my department to a number of interested parties stated:

“No college would be able to obtain powers to award foundation degrees unless the Privy Council was sure that it was equipped to do this. This means that colleges would have to meet specific criteria for Foundation Degree awarding powers, on which we propose to consult. As is the case in the existing degree awarding powers system, the QAA would be invited to report in any case on whether an institution met the criteria or not, and only after receipt of a positive report would the Privy Council decide to make an award”.

As my noble friend will know, those QAA criteria are stringent. I am advised that only a small number of FE colleges would be capable of meeting them, but many more would wish to do so—a point rightly made by my noble friend Lady Morris. The nature of the criteria themselves, which are very demanding, would limit the number, and we can debate the desirability of whether even that small number should be allowed to do so. The Government are on the side of deregulation because we believe that that will best serve the needs of students. Based on the criteria on which we intend to consult, our view is that the number able to take advantage of this power would not be large.

As I am running out of time, I shall reply in writing to a number of the many points that have been made. I shall deal with the important issues raised by the noble Lord, Lord Low, in respect of students with special needs. It is an absolutely critical area of further education provision. The House responded very strongly to the points he made about the importance of that work being sustained and enhanced. The noble Lord asked whether the composition of regional councils would ensure that the voluntary sector was fully represented. The Learning and Skills Council has set up a Working Together strategy committee, which focuses on the council’s work with the voluntary and community sector, and we will take full account of its needs when we appoint the membership of the councils. He asked whether due regard will be paid to the representation of learners with learning difficulties and/or disabilities in the development of proposals and policies under Clause 7. I can assure the noble Lord that guidance will reflect learners with learning difficulties and/or disabilities and those not yet in learning.

The noble Lord, Lord Low, also asked whether we would publish the disability equality impact assessment during the course of the Bill. I can assure him that we intend to publish that during 2007. We have already published the DfES’s disability equality scheme, which was published on 4 December, and I shall see that that is forwarded to him and circulated to noble Lords. That will help us to understand the importance we give to this issue before Committee stage.

The noble Lord sought assurance that there would be a duty on the council in relation to diversity and choice and that it would extend to encompassing national residential colleges for students with specific learning difficulties as well as mainstream colleges. I assure him that the duty will extend to considering all relevant matters. The guidance from the Secretary of State will advise on how learning and skills councils should best engage with groups and persons with learning difficulties and disabilities, including persons not yet in learning.

On London—an important issue raised by many noble Lords—I hope we do not get into a debate about “may” or “shall”. We have established the board; indeed, it had its first meeting last week. It was chaired by the Mayor of London and its vice-chair is Harvey McGrath, who is chairman of London First, an organisation close to the heart of the noble Baroness, Lady Valentine. We have no intention of seeing its work being wound up at an early date. Points were made about a future Secretary of State. If the skills board develops the strength, expertise and voice that we expect, I do not think that there will be any question of any future Government seeking to wind up its work.

My Lords, have the Government entered into contracts with members of the board before the legislation has gone through the House? That is making an assumption.

My Lords, I am sure that we have acted absolutely properly in every decision we have taken in respect of the London Skills and Employment Board, but I will write to the noble Baroness and set out precisely how we have done that.

In conclusion, I return to the remarks of the noble Lord, Lord Moser, which in many ways is where we started in terms of the crusade to enhance further education. He said that he doubted whether our commitment was as strong now as it was back in 1998, when he produced his important report. Let me emphasise to him that our commitment is every bit as strong. We have met all the targets we set in respect of the improvement of the basic skills of the adult workforce in 1998. They were ambitious targets, as the noble Lord knows. We worked closely with the Basic Skills Agency in doing so. Funding has increased every year since then to tackle the basic skills deficit in the adult population and it now totals £500 million per year. We expect another target to be set in the spending review next year that will further enhance our work in this area.

I simply say that by way of conclusion, because a great deal of the debate has rightly focused on the interface between further and higher education. But let none of us forget that in many ways the most valuable work that further education does is to give second-chance opportunities to those who, alas, for whatever reason, were not able to make effective use of their first chance in the school system. Their own career prospects and their lives are too valuable to us to allow them to slip through the net and not have those opportunities. For many tens of thousands of young people and hundreds of thousands, indeed millions, who are later in their lives, further education offers the only prospect they have of being able to equip themselves with the skills and the life chances that those of us who are more fortunate in our initial education take for granted. This is central to our work. It is why everything that we do in further education is so important. On that basis I commend the Bill to the House.

On Question, Bill read a second time, and committed to a Grand Committee.

House adjourned at 9.12 pm.